PRETORIA, Gauteng — The Financial Sector Conduct Authority (FSCA) has exposed a massive crisis regarding FSCA pension defaults, revealing that 16,556 employers are failing to meet their financial obligations. This widespread non-compliance has left more than 500,000 retirement fund members affected, accumulating a staggering R8.3 billion in unpaid contributions.
The financial regulator recently published the names of the delinquent employers in a bid to tackle the growing debt. According to the FSCA, unpaid contributions have surged by 14% over the past year. Municipalities remain among the most significant offenders, with local government entities in the North West and Free State provinces identified as the biggest defaulters.
Keabetswe Tsuene, a conduct supervision specialist analyst at the FSCA, explained that the publication of these names is a strategic move to protect retirement savings. Tsuene noted that naming transgressors aims to create vital awareness for affected members and society at large, including third-party entities that contract these employers. The initiative also addresses a long-standing industry issue where members frequently claim they were not adequately communicated with regarding the status of their funds.
While naming and shaming serves as a powerful public deterrent, Tsuene emphasized that it is only one part of a broader resolution strategy. The primary responsibility to recover arrears and hold defaulting employers accountable lies with the retirement funds themselves.
Regulated funds are entrusted with the duty to pursue civil means to recover stolen or unpaid funds. This includes approaching the courts to obtain execution warrants or attaching the defaulting employers’ bank accounts. Additionally, funds can lodge complaints and execute determinations through the Office of the Pension Funds Adjudicator.
Beyond civil recovery, the non-payment of pension fund contributions is a criminal offense under the Pension Funds Act. Tsuene highlighted that retirement funds are legally required to open criminal cases against the defaulting entities with the South African Police Service (SAPS) and to hold the directors of these companies personally liable for the debt.
For employees who suspect their retirement savings are being compromised, Tsuene outlined several avenues for recourse. Members can lodge formal complaints with the Office of the Pension Funds Adjudicator or open criminal cases directly with the SAPS. However, she advised that members should first approach their respective retirement funds to ascertain the true state of affairs and ensure the fund is actively attempting recovery.
While members can approach the FSCA, Tsuene clarified the regulator’s specific mandate. As the industry watchdog, the FSCA cannot grant direct financial relief to individual members. Instead, its role is to ensure that the boards of pension funds are strictly complying with the law and fulfilling their fiduciary duties to recover members’ hard-earned savings.
