Billions of rands in pensions have still not been paid in South Africa – BusinessTech
The Financial Sector Conduct Authority (FSCA) has updated its list of companies and entities who have not paid the required pension fund contributions in South Africa – with over 4,000 still on the hook.
The authority published the initial list of defaulting employers on 1 September 2023, listing 5,430 employers who had 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.
Since then, the list has narrowed to around 4,200 entities, showing significant progress and indicating that the ‘name and shame’ method is working.
According to the FSCA, approximately R7 billion in contributions remain unpaid, with companies lagging between 5 months and 252 months (21 years) in outstanding payments.
“Pension funds must ensure that proper records of the reports relating to arrear contributions are kept as required in terms of the PFA, and that reports to the Authority in this regard are accurate and submitted in a timely manner,” the group said.
According to the PFA, employers must pay the prescribed contributions to a retirement fund within seven days of the due date.
“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.
This contravention impacts not only retirement benefits but also risk benefits payable to the members.
“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.
Following the publishing of the initial list, BusinessTech was contacted by several companies and businesses contesting their inclusion on the list – even going as far as threatening legal action in some cases.
According to feedback from the FSCA, there might be instances where the respective employers have paid over the outstanding contributions as there is a delay between the reporting date and the date of publication.
There are also cases where employers have paid over the contributions, but the funds they pay to have not been keeping proper records or submissions.
At the time, the FSCA said that it had received a small number of updates and would issue a correction to the data once confirmed. In its latest report, these errors were noted in a new annexure, where ten companies and groups were confirmed to be up to date.
The list of entities is updated quarterly, so any listed entities who were included through error or delay will only be removed from the list in the next report.
“Employers are urged to approach their respective retirement funds with information confirming that their contributions are, in fact, up to date and to require the funds to update their submissions to the FSCA,” it said.
The full list of outstanding payments as at the end of March 2024 can be found on the FSCA’s website.
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