WeeklySA_AdminBREACH: The number of entities that failed to pay over staff contributions almost doubled to 15 521 over the period, with as many as 592 000 workers in 67 retirement funds affected…
By Adelaide Changole
South Africa’s financial regulator is gearing up to act against employers who fail to remit worker contributions to retirement funds, a transgression that has become increasingly commonplace.
The total outstanding amount owed by employers climbed 40% to R7.29 billion ($418 million) in the 15 months to March 2025, a report published by the Financial Sector Conduct Authority yesterday shows.
“I am very hopeful that in the next 18-24 months,” the situation will change with the enactment of the Conduct of Financial Institutions Bill, the FSCA Commissioner Unathi Kamlana said in a press briefing. The law will bring employers who pay retirement contributions under its supervision.
The number of entities that failed to pay over staff contributions almost doubled to 15 521 over the period, with as many as 592 000 workers in 67 retirement funds affected.
“When contributions are deducted from salaries, but not remitted to the relevant funds, it constitutes a serious breach of judiciary responsibility and ethical responsibility,” Kamlana said. “Such conduct not only undermines and erodes trust, it may also amount to financial misconduct, maybe even criminal fraud, which should attract severe consequences.”
The increase in non-compliant employers came after two large retirement funds — the Auto Workers Provident Fund and the Motor Industry Provident Fund — were included on the list of those who faced scrutiny.
The funds didn’t immediately respond to requests for comment.
The implementation of a so-called two-pot pension system last September, which allows workers to access part of their retirement savings early, also led to the discovery of non-compliant employers.
“When some employees sought to access funds in their savings accounts, they discovered to their shock that their employers had not been paying regularly contributions to retirement funds regularly, leaving them with nothing to access,” Kamlana said.
The Organization for Economic Co-operation and Development data shows the average South African can expect to earn only 16% of their working salary in retirement, compared with the 61% average for OECD nations.
Without access to their pension savings, South Africans may be forced to rely on family for support, depend on government assistance, or face the risk of falling into poverty in retirement. – Fullview
