The FSCA’s inaugural list of employers that owed retirement fund contributions erroneously named employers that were not in arrears.
In June 2022, the Authority said it would publish, every quarter, the names of employers that fail to pay employees’ retirement fund contributions over to the fund.
The FSCA followed through on this undertaking in August last year, when it published a 101-page document naming 3 262 employers that were allegedly in arrears with their contributions at the end of April 2023.
But shortly after the list was published, there were complaints – as well as threats of legal action – from entities claiming their names were on the list even though they could produce proof that their contributions were up to date.
The FSCA this week admitted that a handful of entities should not have been included on the initial “name and shame” list. Its latest list of alleged offenders is accompanied by an annexure naming 10 businesses that were erroneously included on the list published in August.
The latest list names employers that were allegedly non-compliant with section 13A of the Pension Funds Act (PFA) at the end of July 2023. The 183-page document names about 4 100 entities, which are listed according to the period for which the outstanding contributions are due, from longest to shortest.
The alleged “worst offenders” (four entities) have been in arrears for 21 years.
As with the initial list, most of the employers owe contributions to the Private Security Sector Provident Fund. Other funds whose names come up repeatedly are the Transport Sector Retirement Fund, the Municipal Councillors Pension Fund, and the Metal Industries Provident Fund.
The FSCA, as it did last year, pointed out that because of the delay between the reporting date of the arrear contributions and the date of publication, some employers on the list may have paid over their outstanding contributions.
The Authority also published a third annexure listing employers that, after the publication of the list in August, either are no longer in arrears (nine entities) or have arranged to settle the arrears. This 12-page annexure also lists employers that are the process of being liquidated or whose participation in the fund is being terminated.
This article does not provide a link to the annexures because Moonstone would prefer not to have to deal with complaints from employers that are erroneously listed as being in arrears.
The FSCA once again pointed out that the information on the lists is provided to it by the retirement funds in which the employers participate.
It reminded retirement funds of their statutory obligation to keep proper records of arrear contributions and submit accurate and timely reports in this regard.
The Authority drew attention to the provisions of the Financial Sector Regulation Act (FSRA) as justification for publishing the employers’ names.
Section 251(1)(b) of the Act requires the FSCA to collect and use information, including personal information as defined in the Protection of Personal Information Act, to the extent that the regulator determines it necessary to perform its duties as defined by the applicable legislation.
Section 251(2)(a) of the FSRA states that a financial sector regulator must disclose information gathered in terms of section 251(1)(b) if the regulator determines this is necessary to comply with its obligations to:
- perform functions in terms of, or as enabled by, a financial sector law;
- warn financial customers against conducting business with a financial institution or other person conducting activities in contravention of a financial sector law;
- alert financial customers to activities carried out by a financial institution that a financial sector regulator believes to constitute a risk to financial customers;
- protect the public interest; and
- deter, prevent, detect, report, and remedy fraud or other criminal activity in relation to financial products or financial services.
For more information about the lists, contact the FSCA’s Retirement Funds Supervision Division by emailing Ms Takalani Lukhaimane at Takalani.Lukhaimane@fsca.co.za or FSCAQueries13Anotices@fsca.co.za
Statutory obligations
The FSCA once again highlighted employers and retirement funds’ statutory obligations regarding contributions.
Section 13A(1) of the PFA requires an employer of a retirement fund member to pay contributions deducted from the member’s remuneration, as well as the employer’s contribution, to the fund.
The contributions must be paid over within seven days after the end of the month for which the contributions are due, per section 13A(3)(a).
In terms of section 37(1)(a) of the PFA, 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 up to 10 years, or both.
The boards of retirement funds have a duty to recover outstanding contributions from employers by making use of the various avenues available to them.
Conduct Standard 1 of 2022 places notification and reporting obligations on the board of a fund when an employer fails to comply with 13A(2)(b) or 13A(3)(a) of the PFA.
The Conduct Standard became effective on 19 February 2023.
Boards must report material contraventions to the affected members and the FSCA. Importantly, where the contravention persists for 90 days, boards must lay a criminal complaint with the South African Police Service against the persons at the participating employer who are responsible for compliance with the PFA.
Compound interest will be levied on late or unpaid contributions. The prescribed interest rate is the prime rate plus 2%.
Retirement funds are obliged to inform members, in writing, if the participating employer is not compliant with any of its statutory obligations.
