SA’s private security sector and the embattled motor industry are the main contributors in arrears owed to retirement fund contributions.
This was revealed by the Financial Sector Conduct Authority (FSCA), with the watchdog noting a 50% increase in noncompliant employers over the past two years.
The FSCA data shows that by end-March there were 15,521 employers in contravention of the Pension Funds Act with total arrears estimated at R7.29bn, up from R5.2bn reported at end-2023.
About R2.98bn of the R7.29bn reported in this cycle is attributable to late payment interest.
The FSCA decided to publish the names of these employers “due to the severity and duration of their arrears”.
“This represents a 50% increase in noncompliant employers since the December 31 2023 publication, primarily driven by the inclusion of two of the largest retirement funds in the industry — the Auto Workers Provident Fund and the Motor Industry Provident Fund. Together, these funds account for 3,353 (57.5%) of the 5,821 published employers,” the FSCA said.
“We have previously raised concerns regarding the quality of data held by retirement funds, particularly the Private Security Sector Provident Fund (PSSPF). In response, the PSSPF initiated a data cleansing drive, which remains ongoing. Encouragingly, this effort has led to notable improvements in data quality.”
In Numbers
- 15,521 employers in arrears as of end-March.
- R7.29bn total estimated arrears.
- R2.98bn of arrears due to late payment interest.
- 50% increase in noncompliant employers since Dec 2023 publication.
- 5,821 published employers, with 57.5% from the motor sector.
- 5,300+ legal actions against motor industry employers.
- 1,010 criminal cases opened, up from 111 in 2023.
- 5,671 employers owe more than R50,000 for 5+ months.
- 304 months: Longest arrears (Izinga Panelbeaters).
Nearly R2bn of the arrears was attributable to the Auto Workers and Motor Industry Provident Funds, while the private security industry was flagged for not settling late payment interest.
To this end, legal measures are being taken against the motor sector with more than 5,300 legal action incidents reported against employers in the sector.
The FSCA also noted an increase in criminal cases opened for infringements to the Pensions Fund Act, with cases opened with the police increasing from 111 at end-2023 to a whopping 1,010 — underscoring the scale of the problem and frustration of pension fund members.
The data shows about 5,671 employers have outstanding contributions exceeding R50,000, which have been overdue for five months or more.
“In collaboration with the National Treasury, millions owed to members and retirement funds have been recovered. This was achieved through the strategic withholding of equitable share allocations, compelling municipalities to make the necessary third-party payments,” the FSCA said.
“The FSCA acknowledges and appreciates the intervention of the National Treasury. The FSCA continues to engage with key stakeholders, including the National Treasury, auditor-general, law enforcement agencies, and the department of employment & labour, to ensure accountability and protect the interests of retirement fund members.”
To show the scale of noncompliance, an outfit called Izinga Panelbeaters had not paid contributions for 304 months by end-March, making it SA’s most errant employer.
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