FSCA names and shames employers owing pension contributions

FSCA names and shames employers owing pension contributions

• 15 September 2023
• Accounting
• South African Accounting Academy

The FSCA has had its fill of employers that fail to pay over their employees’ contributions to their pension and provident funds and has taken to naming and shaming them publicly.

Note that this is money that is deducted from employees’ payslips for their retirement savings. It belongs to the employees, not the employers, and by withholding it, the companies are, in effect, committing theft.

The list contains the names of 3 262 companies and municipalities, which are up to 252 months, or 21 years, in arrears with pension fund payments.

The funds are mostly trade unions, bargaining councils and umbrella funds (commercial funds that house multiple employers). The trade union and bargaining council fund members are among the lowest-paid workers in South Africa.

Of the 3 262 employers on the list, 2 663 are in arrears by a year or more. Of these:

• An astonishing 2 224 (83%) are security companies in arrears to the Private Security Sector Provident Fund.

• 158 (6%) are Western Cape furniture manufacturers in arrears to the Bargaining Council for the Furniture Manufacturing Industry of the Western Cape Provident Fund.

• 73 (3%) are various companies with employees belonging to the Saccawu National Provident Fund.

• 47 (2%) are clothing manufacturers owing payments to the National Bargain Council for the Clothing Manufacturing Industry Northern Region Chamber Provident Fund.

• 113 (4%) are municipalities owing payments to various local government funds.

The FSCA’s statistics show that private-sector companies owe about R6 billion and municipalities a further R1bn in contributions.

The Pension Fund Act further states that “any person who contravenes or fails to comply with section 13A is guilty of an offence and liable on conviction to a fine not exceeding R10 million or to imprisonment for a period not exceeding 10 years or to both such fine and imprisonment”.

Click here to download the List:

https://www.fsca.co.za/News%20Documents/FSCA%20Press%20Release%20-%20The%20FSCA%20publishes%20list%20of%20employers%20in%20arrears%20for%20retirement%20fund%20contributions.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

• 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 an employer, you have an obligation to ensure that retirement fund contributions are paid over to the relevant authority, otherwise, it could be construed as theft.

Relevance to Your Clients:

• An employer has an obligation to ensure that retirement fund contributions are paid over to the relevant authority, otherwise, it could be construed as theft, 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.

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