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FSCA: Calculation of late payment interest by pension funds
- 17 April 2025
- Regulatory Compliance and Legislation
- South African Accounting Academy
Summary:
The FSCA issued an update regarding the calculation of late payment interest (LPI) on pension fund contributions.
Article:
Initially, FSCA Communication 15 of 2023 stated that LPI starts on the 8th day, i.e., the day after the seven-day payment period ends.
However, after receiving independent legal advice and considering the Office of the Pension Funds Adjudicator's interpretation, the FSCA now confirms that LPI should be calculated from the 1st day following the end of the month in respect of which contributions were payable.
The FSCA has asked National Treasury to consider amending the relevant statutory provisions to clarify the start date for LPI calculation.
The purpose of this Communication is to provide an update to the industry on the date to be applied for the calculation of late payment interest (LPI) amounts in respect of contributions, which are not transmitted into a pension fund’s bank account within the period prescribed in section 13A(3)(a) of the Pension Funds Act, 1956 (PFA).
Click here to download the 3-page FSCA Communication 6 of 2025 (RF):
Relevance to Auditors, Independent Reviewers & Accountants:
- The Pension Funds Act is yet another piece of legislation that your clients must comply with, and which you must assess compliance with. If they don’t comply with the relevant laws and regulations, you have certain reporting obligations in terms of NOCLAR (NOn-Compliance with Laws And Regulations) – this could include reporting to management, qualifying your audit opinion, reporting a Reportable Irregularity, etc.
- Auditors, independent reviewers and accountants must ensure that they are aware of the latest news that is published by regulators, such as the FSCA.
- As pension fund, your client has an obligation to ensure that late payment interest is calculated correctly and paid over to the relevant authority, otherwise it could be construed as non-compliance.
Relevance to Your Clients:
- A pension fund has an obligation to ensure that late payment interest is calculated correctly and paid over to the relevant authority, otherwise it could be construed as non-compliance, and the employer could be held liable.
- Relevant financial institutions must ensure that they are aware of the latest news that is published by regulators, such as the FSCA.