A retirement fund member discovers that contributions deducted from their salary were never paid into the fund. An insurance policyholder finds their cover inadequate when a claim arises. An investor signs documents on the strength of an adviser’s recommendation without fully understanding the risks.
These are different problems, falling under different regulatory mandates. But each exposes the gap between the financial protection a person expects and what is delivered when they need it.
That was the common thread running through a live session at the 2026 EBnet Evolutionaries Conference, “Benefits Activated”, featuring Naheem Essop, Deputy Pension Funds Adjudicator, and Adv John Simpson, the FAIS Ombud.
Essop sees problems surface when members try to access their retirement benefits, only to discover that contributions have not been paid or records are incomplete. Simpson highlighted another vulnerability: consumers who assume everything is taken care of once they have signed the paperwork, and advisers who cannot demonstrate what they recommended and why.
Both highlighted how failures along the financial journey can leave consumers exposed.
Trustees must act before members discover a problem
At the Office of the Pension Funds Adjudicator (OPFA), complaints often arise when members resign, retire, are retrenched, claim death benefits or apply to withdraw from the savings component under the two-pot retirement system.
Members may discover that their records are incomplete, their benefits are smaller than expected or contributions have not been paid over by their employers. If contributions and insurance premiums go unpaid, members and their dependants may also lose death or disability cover.
Essop said these failures frequently occur at the handover points between employers, retirement funds and members. Employers must pay contributions over and provide contribution statements. Funds must monitor receipts, detect non-payment and act against defaulting employers.
Communication is another weak point. Members may receive generic or delayed information, or none at all. Where correspondence is routed exclusively through an employer that is failing to meet its obligations, there is no guarantee it will reach the people who need it.
Essop believes trustees should oversee the entire process rather than leave members to discover problems themselves. Unpaid contributions should be detected early, not years later when someone tries to access a benefit.
About 85% of complaints received by the OPFA relate to withdrawal benefits or non-payment of contributions, Essop said. The categories overlap because members may discover that contributions have not been paid only when they try to claim.
The two-pot system has brought these weaknesses into sharper focus by encouraging members to engage more frequently with their retirement funds. Problems that might previously have remained hidden are now coming to light.
“We’d like to see pension funds actually taking the lead on this and not leaving it up to the individual members,” Essop said.
The scale of unpaid contributions
The FSCA published Communication 12 of 2026 (RF) on 30 June 2026, its fifth publication naming non-compliant employers since it announced in 2022 that it would name employers with arrear contributions.
The communication named 6 064 employers reported to have contravened section 13A of the Pension Funds Act. Separately, 75 retirement funds had reported 16 556 employers to the FSCA for arrears as at 28 February 2026. The regulator estimated total arrears at R8.33 billion, affecting approximately 590 000 members. This was R1.04bn, or 14.2%, higher than the R7.29bn reported at 31 March 2025. Late-payment interest accounted for 43.5% of the total, with interest increasing by 21.5%, compared with a 9% increase in the capital portion.
The figures give weight to Essop’s argument that trustees must do more than report defaulting employers. He said most complaints reaching his office come from individual members, even though the underlying problem may lie with an employer failing to pay contributions.
Funds have a specialised process through which they can lodge complaints against defaulting employers, but Essop said it is not being used often enough.
“If you looked at the FSCA name and shame list, I think there were something like 6 000 employers that were named and shamed for not paying contributions, and that affected about 590 000 members,” he said. “So for us as an ombud that has to deal with this, that’s a potential of 590 000 complaints, or if funds take the initiative, that can be reduced down to 6 000.”
Advisers must do more than send a policy document
Simpson said the biggest problem his office encounters is often not necessarily bad advice, but advice that has not been adequately documented.
Advisers may know their clients well, have worked with them for years and may, for example, discuss and arrange for financial cover over a game of golf. But when something goes wrong, the adviser remembers explaining the details, but there is no record to prove what was discussed.
“I know it’s a pain … The compliance is crazy, but I tell you now, everything’s fine until it isn’t,” Simpson said.
When a complaint arises, he said, the first questions are where the record of advice is, whether there is evidence of annual reviews, and whether the adviser documented any comparison between products. Without those records, the adviser may struggle to demonstrate that the advice was appropriate and that the required process was followed.
Annual reviews are particularly important. Simpson said a review should not consist of sending a policy document to a client and asking them to read it and report any changes. Advisers should sit down with clients, go through their policies and establish whether the cover still meets their needs.
He suggested allowing at least an hour for a proper review, and potentially two or three hours for a comprehensive one. A meaningful discussion is likely to uncover changes that need attention, whether a client has acquired assets, experienced a change in circumstances or needs different cover.
Home insurance illustrates the consequences of getting this wrong. Simpson said properties are often insured for market value rather than replacement value. The cost of rebuilding can be substantially higher: in his experience, replacement value can be two to three times market value.
A policyholder may believe their home is adequately insured, only to discover the shortfall after a loss. A thorough review gives the adviser an opportunity to explain the difference, check the sum insured and document the advice.
Consumers must stay involved
Both ombuds emphasised that consumers cannot simply sign documents and assume their financial affairs are being taken care of indefinitely.
“It’s your future. It’s your financial security. You have to be totally and 100% engaged with it,” Simpson said.
He encouraged consumers to ask questions, understand their products and review their financial position regularly, suggesting they engage with their advisers at least every six months. Changes in income, assets, family circumstances and retirement plans can all affect whether existing arrangements remain suitable.
AI can help consumers research financial topics and prepare questions, Simpson said, but it should not replace professional advice.
Essop added that retirement fund members cannot be expected to understand their benefits without proper education. Membership is often part of an employment package, rather than the result of an employee actively researching and choosing a fund.
He recalled presenting information about retirement fund default regulations to a room of human resources professionals, some of whom struggled to explain the difference between a retirement annuity, a pension fund and a provident fund.
Funds must take the initiative, explaining how membership works and what benefits members can expect. That may mean engaging directly with employees in their workplaces rather than relying on documents or communication through employers.
Financial literacy cannot be assumed
The discussion exposed a common weakness across financial services: assuming people understand products simply because they are educated or have access to information.
Simpson recounted a complaint involving a lawyer who worked as a conveyancer but did not have specialist knowledge of insurance. Advisers cannot assume that clients understand material information or exclusions simply because they are highly qualified.
Both speakers stressed that financial education must be ongoing and delivered in language people understand. Consumers need to know what they are signing up for, while trustees and advisers must explain the implications rather than assume knowledge.
Simpson emphasised that responsibility cannot be shifted to consumers simply because they are educated or should, in an adviser’s view, have understood the information.
“The consumer is not expected to know anything,” he said. “Alleging that they should have known is a very dicey approach to take.”
He added that the less financially educated a client is, the more an adviser needs to explain and document what has been explained.
“The onus is on the advisor 100%, and really, it’s about making sure the less financially educated the consumer is, the more you have to explain, and the more you have to document what you explain,” he said.
