FSCA: Publication of names of pension funds and employers with arrear contributions

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FSCA: Publication of names of pension funds and employers with arrear contributions

• 20 December 2024
• Regulatory Compliance and Legislation
• South African Accounting Academy

Summary:

The Financial Sector Conduct Authority (FSCA) has published the names of pension funds and employers with arrear contributions in direct contravention of section 13A(3)(a) of the Pension Funds Act, 1956, as of 31 December 2023. (Not all of the names, ‘just’ the top ±2 330 transgressors that are in arrears by R50 000 and/or are more than 5 months in arrears.)

Article:

This list constitutes thousands of employers that deduct contributions from workers and fail to pay them over to pension funds.

The public naming and shaming saw almost 1 000 employers taking swift action to clear their arrears.

Pension funds actually reported 7 700 employers that are breaking the law by deducting pension fund contributions from workers’ wages and not paying the workers’ money to the respective pension funds.

The FSCA has published the following 2336 names from the 7770 employers that were reported:

• 2003 employers who have outstanding contributions that are more than R50 000 and have been outstanding for a period of more than 5 months;
• 200 employers who have outstanding contributions that are more than R50 000 but the last contribution date has not been provided;
• 113 employer’s whose outstanding contributions are less than R50 000, but the outstanding LPI is more than R50 000 and has been outstanding for more than 5 months; and
• 20 employers that have not contributed since date of participation in the retirement fund.

The balance of the 5440 employers have not been included in the publication as they do not meet the thresholds set out above.

The worst offenders are private security companies, with the Private Security Sector Retirement Fund reporting 56 companies to the FSCA, and the Transport Sector Retirement Fund, which says 442 transport companies are not complying with the provisions of the Pension Funds Act (PFA).

The Hairdressing, Beauty and Skincare Industry Pension Fund reported 129 errant employers, the names of which suggest that many smaller salons are not caring for their employees.

The FSCA is getting tough on transgressors and promises to institute criminal charges against individuals who are responsible.

Additional documents:

• Annexure A - List of participating employers in contravention of section 13A of the PFA as at 31 December 2023 (109 pages)
• Annexure B - List of employers that have paid, or made payment arrangements, since publication of FSCA Communication 10 of 2024 (RF) on 26 March 2024 (30 pages)
• Annexure C - Erratum - List of employers who were included in FSCA Communication 10 of 2024 (RF) erroneously (RF) (1 page)

Click here to download the FSCA Communication 41 of 2024 (RF) and Annexures:

https://www.fsca.co.za/Regulatory%20Frameworks/Regulatory%20Frameworks%20Documents/FSCA%20Communication%2041%20of%202024%20(RF).zip

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 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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