Pension Funds Adjudicator gets tough on employers owing retirement funds money

Pension Funds Adjudicator gets tough on employers owing retirement funds money

The Office of the Pension Funds Adjudicator (OPFA) is upping the ante against employers that owe contributions to retirement funds. From 1 December, the office may hand down orders that funds or member can use to obtain a writ of execution against the employer’s property.

In a communication last month, the OPFA said it receives a large number of complaints about the non-payment of contributions by employers.

In such cases, the OPFA has made orders calling on the fund and the employer to exchange information for the purpose of calculating the amount owed to the fund, whereafter the employer must pay the fund the outstanding amount.

Although the OPFA’s determinations are deemed to be civil judgments, its orders have sometimes been ignored, and funds have had to go to court to compel employers to comply with them.

“The OPFA deems it undesirable for complainants to be placed in a position whereby they are required to expend further time and legal costs in obtaining relief. In the circumstances, the OPFA will commence conducting investigations pertaining to arrear contributions in a manner that enables the adjudicator to make orders sounding in money with effect from 1 December 2021. This is intended to make it easier for a fund and a member to enforce such an order by obtaining a writ of execution from the relevant court in the event of non-compliance with the order by the employer or fund,” the OPFA said.

Arabella Bennett, an executive consultant in ENSafrica’s banking and finance department, said the decision was significant, because the OPFA could order that the employer (as the judgment debtor) be directed to pay a specific sum of money.

“Retirement funds, as the judgment creditors, may use such an order to get a warrant of execution issued against the property of an employer to settle the judgment debt pertaining to the employer’s arrear contributions. In such an instance, the property of the employer could be sold in execution and the proceeds applied to the repayment of the amount owing.”

The OPFA said funds that are receiving complaints from members about arrear employer contributions should provide the OPFA with the following information:

  • The periods for which the employer is in arrears;
  • A reconstruction of the complainant’s contribution schedule based on the information already in the fund’s possession, for the periods for which the employer is in arrears.
  • A computation of the arrear contributions owed by the employer based on the reconstructed schedules.
  • The value of the member’s fund credit in the fund to date; and
  • A calculation of the benefit due if all contributions had been paid.

The OPFA said it may not always be possible for the Adjudicator to make an order sounding in money, particularly where the non-compliance is ongoing.

“When there is an ongoing non-compliance, there is a challenge in making an order sounding in money, since there is no fixed period to refer to in calculating the outstanding arrears. The non-compliance may be continuing even as the Adjudicator investigates the complaint, and each month that passes, new contributions become payable and the outstanding arrears grow,” OPFA senior legal adviser Naheem Essop said.

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