Arrear contributions: An alert to retirement funds and employers

  • Post category:Retirement

FSCA COMMUNICATION 17 OF 2022 (RF)

Arrear contributions: An alert to retirement funds and employers

  1. Purpose
    This communication is meant to alert retirement funds and employers regarding arrear
    contributions by retirement funds and employers. The Financial Sector Conduct Authority
    (“the Authority”) intends to publish the names of those retirement funds and employers who
    are in arrears.
  2. Background
    2.1 Arrear contributions arise when employers:
    (a) deduct retirement contributions from employees’ salaries and do not transmit this
    money into the bank account of a retirement fund, or
    (b) fail to transmit employer contributions, in terms of the retirement funds’ (in which they
    participate) rules, into the fund’s bank account.
    Arrear contributions do not arise in instances where the fund and employer have registered
    and applied rules which enable the suspension of contribution payments for a period
    2.2 In terms of Section 13A of the Pension Funds Act, 1956 (Act No. 24 of 1956) (“PFA”), funds
    have 7 days after the expiration of the period in respect of which contributions are due, to
    pay the contributions over to the funds.
    2.3 Section 37(1) of the PFA makes the contravention of section 13A (non-payment of
    contributions) a criminal offence, with consequences of potential personal liability for the
    directors.
    2.4 Our preliminary statistics indicate that municipalities and private sector companies have
    approximately R1 billion and R6 billion arrear contributions, respectively. This compromises
    good outcomes for members of funds who would have to retire short of their full retirement
    benefits.
  3. Intention to publish of names of retirement funds and employers with arrear
    contributions

    3.1 Retirement funds and employers are hereby formally alerted to an imminent publication of
    the names of employers and funds with arrear contributions. The Authority is currently
    compiling the list and checking the accuracy of the value of arrear contributions.
    3.2 Retirement funds must immediately share this communication with the employers.
  1. Enquiries
    4.1 For further information regarding this Communication please contact the Authority by
    emailing Ms. Corlia Buitendag, at cornelia.buitendag@fsca.co.za.

OB MAKHUBELA
DIVISIONAL EXECUTIVE: RETIREMENT FUNDS SUPERVISION
Date of publication: 9 June 2022