The Financial Sector Conduct Authority (FCSA) says over 5,000 employers in South Africa have failed to pay retirement fund contributions.<\/p>\n\n\n\n
The FCSA said that 5,430 employers have contravened section 13A of the Pension Funds Act (PFA) – which prescribes the way in which payments and other benefits should be made to a retirement fund. <\/p>\n\n\n\n
The FCSA said that 28% of employers have more than one month outstanding, 24% have between two and 12 months, 23% have between 13 to 60 months, and 25% have 60 months or more. <\/p>\n\n\n\n
According to the PFA, employers need to pay the prescribed contributions to a retirement fund within seven days of the due date.<\/p>\n\n\n\n
“Failure to pay over contributions as required is not only a contravention of the PFA but leads to prejudice and unfair outcomes for members,’ the FSCA said. <\/p>\n\n\n\n
Not only are retirement benefits impacted through this contravention, but risk benefits payable to the members are also impacted. <\/p>\n\n\n\n
“If the employer does not pay over contributions for a period of 3 months, the insurer will repudiate the claim on the basis of outstanding premiums and the dependents, in the case of a death benefit, will not be paid the insured portion of the death benefit payable from the fund,” the FSCA said. <\/p>\n\n\n\n
Preliminary statistics from the FSCA state that municipalities and the private sector have approximately R1 billion and R6 billion in area contributions<\/strong>, respectively. <\/p>\n\n\n\n “Whilst financial difficulties faced by municipalities and the effects of Covid-19 on the economy are public knowledge, employers still have an obligation to their employees to pay over-deducted contributions and employers to the retirement fund as per the PFA,” the FSCA said. <\/p>\n\n\n\n The Boards of retirement funds have the duty to recover outstanding contributions for employers. <\/p>\n\n\n\n As per Conduct Standard 1 of 2022, Boards of retirement funds have to report material contraventions to the affected members and the FSCA. <\/p>\n\n\n\n If the contravention lasts for a period of 90 days, the Boards must approach the South African Police Service to lay charges against the employer. <\/p>\n\n\n\n “The FSCA is continuing to engage with the relevant authorities to ensure that the criminal element of this contravention is effective.”<\/p>\n\n\n\n However, it stated that affected employees should first approach their employers before the relevant retirement fund. <\/p>\n\n\n\n
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