Transcription of SECTION 13A OF THE PFA: EMPLOYER’S FAILURE TO PAY ...
1 68 SECTION 13A OF THE PFA: EMPLOYER S FAILURE TO PAY EMPLOYEE S CONTRIBUTION TO THE EMPLOYEE S PENSION fund Motseotsile Clement Marumoagae Senior Lecturer & Supervisor in the Community Law Center, North West University (Mafikeng Campus) 1 INTRODUCTION Contributions to retirement funds are typically divided into two categories, being the members or employees contributions which are deducted from members salary and employers contributions which are usually contributed by the employer as a fringe benefit.
2 The rules of the fund most often make provision for the employer to pay current contributions for each of the employees employed by that employer to the pension fund to which the employer is participating until the retirement date of such The employment contract would also determine whether the employer can deduct amounts from the employee s salary to pay over to the pension fund in addition to the benefits granted by the employer to the employees which are paid over to the pension fund .
3 For some employers, contributions to pension funds are benefits that employee-members are contractually entitled to as part of their salary package and/or employment contract. In terms of SECTION 13A of the Pension Funds Act 24 of 1956 (the PFA) employers must pay contributions to the pension funds to which they are participating as provided for in the rules of those funds. These contributions are amounts which the rules of pension funds empower employers to deduct from their employees salaries.
4 In order to ensure monitoring and compliance with SECTION 13A of the PFA, the principal officer of the pension fund or any authorised person thereto by the board of trustees has a duty to report to the board of that fund on the non-payment of contributions by any employer. In South Africa, some employers have been found to have deducted amounts from their employees salaries but failed to contribute such amounts to the relevant pension funds, more * LLB LLM (Wits ) LLM (NWU) Diploma in Insolvency Law and Practice (UP).
5 1 See generally Part four of the Revised rules of the central provident fund available at: +products/retirement+funds/ fund + rules (accessed 05 July 2014). SPECULUM JURIS VOLUME 29 PART 1 2015 69 particularly in the private security The issue of non-payment of pension funds contributions to pension funds has not yet received academic attention in South Africa. As such, in this paper in addition to the determinations of the Pension Funds Adjudicator and court decisions, will also draw on some of the newspaper reports which have highlighted this problem.
6 3 The aim of this paper is to highlight the problem of employer s non-payment of employees contributions to pension funds and discuss how the law seeks to address this issue. This will be done by evaluating the role of SECTION 13A of the PFA as well as Regulation 33 of the PFA in protecting employees who might be affected by their employers FAILURE to pay their contributions to their retirement funds. I will reflect on the role of the office of the Pension Funds Adjudicator as well as the Financial services Board (FSB) when faced with complaints of non-payment of retirement fund contributions.
7 I will also discuss the impact of the amendments to the PFA by the Financial services Laws general Amendment Act 45 of 2013 (the FSLGAA) which has reintroduced criminal sanction against employers who fail to make employees contributions to retirement funds. 2 EMPLOYERS NON-PAYMENT OF PENSION fund CONTRIBUTIONS AND THE NEED TO INFORM MEMBERS Employees who are members of pension funds which employers are entitled to deduct contributions directly from their salaries have a right to have such amounts paid over to such funds timeously in order not to negatively affect their retirement benefits.
8 Employees should be protected from the conduct of scrupulous employers who fail to pay contributions which they should pay to their employees pension funds. Pension fund schemes are amongst the most important social security initiatives in the South African social structure because they determine the living standard of millions of South Africans and play a decisive role in the economy. Pension money forms the cornerstone of most people s retirement security.
9 When a person retires from active employment, he or she still wants to maintain more or less the 2 See Gafane v The Orion Money Purchase Pension fund (SA) PFA/GA/761/99/NJ, Sekele v Orion Money Purchase Pension fund PFA/NP/69/99/NJ, Motlhamme v The Private Security Sector provident fund PFA/GP/0004927/2013/TKM, and IBM South Africa Pension fund v IBM South Africa (Pty) Ltd PFA/GA/357/01/LS.
10 3 Zungu Security guards robbed of millions in pensions (15 April 2013) Sowetan available at: -pensions (accessed 10 October 2013). See also Du Preez Employers reneging on pension payments (17 March 2013) IOL available at #.Uxx4Z_mSyz (accessed 10 October 2013). SECTION 13A OF THE PFA: EMPLOYER S FAILURE TO PAY EMPLOYEES CONTRIBUTION TO THE EMPLOYEE S PENSION fund same standard of living that existed during his or her working life .4 Pension fund money can also be crucial for the survival of the member when he or she has been retrenched.
