SA’s pension system is in turmoil. Nearly 8,000 employers have failed to pay their pension contributions, leaving a gaping hole in the financial security of hundreds of thousands of employees. This is a form of daylight robbery, a betrayal of trust and a glaring indictment of a system that is meant to protect our
hard-earned money.
The Financial Sector Conduct Authority (FSCA), the industry watchdog, published a list of employers who are in arrears, shedding light on the extent of the problem. But let’s be clear: highlighting the problem is not enough. The FSCA’s role is not merely to act as a messenger; it is to enforce compliance and ensure that the rules are followed.
One might think the threat of a R10m fine or a 10-year prison sentence would be enough to deter employers, many of whom are in the private security industry and local government, from shirking their responsibilities. Yet here we are, with only three cases prosecuted to date, all involving municipal managers. It’s a pitiful track record that suggests enforcement measures are about as effective as a sieve holding water.
The legal framework itself is riddled with loopholes. Under the Pension Funds Act employers are required to make contributions, but the Prescription Act allows them to evade liability if they can stretch out their nonpayment for just three years. And let’s not forget the pension fund boards, which are supposed to act as watchdogs over retirement savings; their failure to report noncompliance to authorities is a dereliction of duty of the highest order.
In the midst of this emerging crisis the FSCA had decided to publish the names of noncompliant employers, hoping that public shaming will do what the law has failed to achieve. While transparency and accountability are critical, this approach feels like a Band-Aid on a bullet wound. Naming and shaming might deter some, but it isn’t a substitute for robust legal enforcement and systemic reform.
Spare a thought for the 300,000-plus affected employees, many of whom work in local government and the private security and courier industries. These are people whose futures are at stake after being left in the lurch. They have been advised to “engage with their employers and retirement funds directly”, or to lodge complaints with the Office of the Pension Funds Adjudicator, if all else fails. That’s a bit like trying to patch a leaking dam with a handful of tissues. It’s downright insulting.
The government and regulatory bodies must do more. The introduction of the Conduct of Financial Institutions Bill is a step in the right direction to grant the FSCA more power to directly address noncompliant employers.
Even so, legislative changes take time, and employees who now don’t have access to their rightful contributions cannot afford to wait.
Besides, it’s not merely about enforcing existing laws; it’s about changing the culture of negligence that has taken root in the pension system. Pension contributions are not optional extras or negotiable items on a balance sheet. They are legal obligations and moral imperatives.
The FSCA’s efforts, with the National Prosecuting Authority and Directorate for Priority Crime Investigation, to bring offenders to justice are commendable but insufficient. Employers who fail to meet their obligations must face swift and decisive action, not just the threat of it.
The bottom line is that the state of the pension system is a damning reflection of regulatory and corporate negligence. The time for half-measures and passive oversight is over. If we cannot rely on the very institutions designed to safeguard our pensions, what hope do we have for a secure retirement?
• Motsoeneng is Business Day deputy editor.
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