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Two-pot requests exposing employers defaulting on pension contributions

By: Natasha Archary

two-pot retirement will cost you
Image: Adobe Stock

Two-pot withdrawal requests are exposing employers who have fallen behind on their pension fund contributions.

While the South African Revenue Service (SARS) has received applications for two-pot withdrawals totalling R4.1 billion, Pension Funds Adjudicator Muvhango Lukhaimane joins Refilwe Moloto on Kaya Biz to share the alarming number of employers who have defaulted on payments into the fund.

As consumers cash out their pension funds under the two-pot retirement system, the Pension Funds Adjudicator said there have been scores of complaints from frustrated consumers who are unable to tap into their savings.

Lukhaimane says that many employers never contributed to pension funds, while some fell behind on payments for many years.

“In some instances, employers didn’t register their employees and therefore never paid contributions on their behalf, even though they were deducting funds for pension or retirement from their salaries.

In other instances, employers may have started off paying but then fell behind and as a result, just stopped paying.

Or employers started paying later and now that people are trying to access their funds, they are noticing that the amounts are not adding up.”

The Financial Sector Conduct Authority (FSCA) has published a list of employers in arrears for retirement or pension fund contributions.

The communication provides the names of 3,262 employers that contravened section 13A of the Pension Funds Act, 1956 (“PFA”) which prescribes the manner in which the payment of contributions and other benefits should be made to a retirement fund.

The intent of the communication is to inform members belonging to those retirement funds and relevant stakeholders.

The FSCA has on 09 June 2022 issued a communication to the industry of its intention to issue such a publication and requested retirement funds to inform participating employers of the FSCA’s intention.

The FSCA received a total of 5430 employers that contravened section 13A of the PFA as at 30 April 2023.

Almost 28% of the employers had contributions outstanding for 1 month, 24% for 2 to 12 months, 23% for 13 to 60 months and 25% for 5 or more years.

Listen to the conversation on Kaya Biz:

Also read: Why corporates find it hard to apologize?

Written by: Natasha



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