The High Court in Johannesburg has confirmed that a retirement fund may be prevented from paying out a member’s benefit while an employer pursues civil and criminal claims arising from alleged misconduct, provided the employer establishes a prima facie case to preserve its recovery mechanism under section 37D of the Pension Funds Act (PFA).
In a judgment delivered in November 2025, the Court confirmed an interim interdict preventing the Sasol Pension Fund from paying the retirement benefit of a former employee pending the outcome of criminal charges and a civil damages action brought by Sasol.
The judgment considered when pension benefits may be withheld while litigation concerning alleged employee misconduct is ongoing and clarifies the obligations of fund trustees under the PFA and the fund’s rules.
The Court emphasised it was not determining whether the alleged misconduct occurred. Its task was limited to deciding whether Sasol had established a prima facie case sufficient to justify preservation of the benefit pending the outcome of the litigation.
Background to the dispute
The matter arose after Sasol began investigating allegations of serious misconduct involving a senior employee who served as an area manager at its Secunda operations. According to Sasol’s court papers, the investigation concerned allegations including fraud, bribery, corruption, and money-laundering linked to procurement activities.
The employee was suspended pending a disciplinary process and subsequently resigned before the disciplinary hearing. The employee denies the allegations.
Following its internal investigation, Sasol took several legal steps. These included:
- urgent proceedings in the Mpumalanga Division of the High Court seeking to freeze funds alleged to be linked to the misconduct;
- the laying of criminal charges with the South African Police Service; and
- subsequently, the institution of civil proceedings in the Mpumalanga Division seeking damages exceeding R48.2 million from the employee, her husband and several other defendants.
In addition, the National Prosecuting Authority obtained preservation orders under the Prevention of Organised Crime Act (POCA) in respect of bank accounts associated with entities linked to the respondents.
Against this background, Sasol requested the Sasol Pension Fund to withhold payment of the employee’s pension benefit in terms of section 37D(1)(b)(ii) of the PFA. At the time the benefit was valued at roughly R2.7m. In October 2024, the fund agreed to withhold the benefit.
After the employee lodged a complaint with the Pension Funds Adjudicator, the fund indicated in January 2025 that it intended to reverse that earlier decision and proceed with payment. Sasol then approached the High Court on an urgent basis to prevent the payout.
The statutory framework
Retirement benefits enjoy strong statutory protection against attachment or deduction. The PFA recognises limited exceptions. Section 37D(1)(b)(ii) provides for deductions from a member’s benefit in respect of compensation for damage caused through theft, dishonesty, fraud, or misconduct where liability is admitted or a court judgment is obtained.
Although the provision refers to deductions after admission or judgment, prior case law has adopted a purposive interpretation: in appropriate circumstances, trustees may withhold payment of benefits pending the determination of liability to protect the employer’s ability to recover losses.
The Sasol Pension Fund’s rules contain a corresponding clause allowing trustees to withhold payment where an employer has instituted legal proceedings or laid criminal charges against a member, subject to conditions set by the trustees.
Prima facie right under section 37D
The Court observed that Sasol had laid criminal charges and had since issued a civil claim for substantial damages. The employee denied wrongdoing and was defending the proceedings.
Although extensive factual disputes existed, the Court made clear its role on an interlocutory application: it was not to resolve the merits of the allegations but to determine whether Sasol had shown a prima facie right. After considering the pleadings and the evidence before it, the court concluded that Sasol had demonstrated a prima facie case that the employee could be held liable for significant damages if the allegations were proved at trial.
Accordingly, the Court held that Sasol had established a prima facie right to invoke the statutory mechanism contemplated in section 37D for the preservation of the benefit pending the determination of liability.
The fund’s exercise of discretion
A central strand of the judgment concerned whether the trustees had exercised their discretion properly.
The Court reiterated that trustees’ decisions to withhold benefits are discretionary and must be taken as a fair-minded and reasonable decision-maker (arbitrio boni viri), applying an objectively reasonable standard to the information placed before them.
Here the trustees initially resolved to withhold the benefit in October 2024. After the member complained to the Adjudicator, the trustees decided to reverse that decision and proceed with payment.
The Court found that the reversal occurred without first engaging Sasol or giving it an opportunity to make representations. The fund had obtained legal advice but did not seek clarification from Sasol about the status of the civil claim or the criminal investigations before deciding to pay out.
On the evidence, the Court concluded that the trustees’ reversal was not exercised reasonably in circumstances where significant litigation and POCA preservation orders were already under way. The Court also observed (carefully attributed as its inference) that the reversal appeared to be influenced, at least in part, by concern about the fund’s reputational exposure rather than by a fresh assessment of the statutory criteria.
Interim relief and the preservation of the benefit
Having concluded that Sasol had established a prima facie right to invoke the section 37D mechanism, the Court turned to the requirements for an interim interdict preventing payment of the benefit.
The conventional requirements were identified: (i) a prima facie right; (ii) a reasonable apprehension of harm if the relief is not granted; (iii) a balance of convenience favouring the applicant; and (iv) the absence of a satisfactory alternative remedy.
Although claims to preserve a discrete, identifiable fund (so-called “quasi-vindicatory” claims) commonly give rise to a presumption of irreparable harm and the absence of another remedy, the Court expressly proceeded to assess the balance of convenience and found it strongly favoured Sasol.
The Court noted that Sasol’s civil claim far exceeded the pension benefit. If the benefit were paid out and dissipated, Sasol’s practical ability to recover by way of section 37D would be seriously undermined. Conversely, withholding the benefit pending finalisation of the proceedings would not cause undue prejudice to the employee: should Sasol ultimately fail, the employee would still receive the preserved benefit, which could grow in value while invested. On that basis the Court concluded that the balance of convenience favoured preserving the benefit.
The order
The Court confirmed the interim order restraining the Sasol Pension Fund from paying out the employee’s pension benefit.
The benefit must remain withheld until the finalisation of either the criminal prosecution arising from the charges laid by Sasol, or the civil action instituted by Sasol in the Mpumalanga Division of the High Court, whichever occurs first.
The employee and her husband were ordered to pay the costs of the application, including the costs of two counsel.
