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In more than five years, only two employers have been found guilty of not paying the pension fund contributions of their workers.
This was revealed by Justice and Constitutional Development Minister Mmamoloko Kubayi in response to a parliamentary question.
uMkhonto weSizwe (MK) party MP Brian Molefe requested information about the number of criminal cases involving employers withholding pension fund contributions that had been investigated and handed over to the National Prosecuting Authority (NPA) for prosecution from March 2020 to January 2024.
He also sought details on how many of those cases had been prosecuted and how many employers had been criminally convicted.
In her response, Kubayi said that section 13A of the Pension Funds Act places a statutory obligation on employers to deduct pension fund contributions from employees’ salaries each month and ensure timely payments to the relevant funds.
Failure to do so constitutes a violation of the law.
However, she said that data on the number of cases investigated and referred to the NPA was unavailable.
“The NPA does not record the details of offences involved in case dockets submitted for decision,” the minister said.
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She further revealed that four cases involving employers had been prosecuted.
“Since 2019, four cases were prosecuted and proceeded to trial stage, two of which were finalised since March 2020.”
Kubayi confirmed that two employers were subsequently convicted.
“One of the accused was also charged with fraud in addition to the contravention of section 13A of the Act.”
The Financial Sector Conduct Authority (FSCA) has been monitoring employer compliance with pension fund contribution payments and has observed a rising trend of defaults.
In November 2024, the FSCA published a list showing that thousand of employers were in arrears. As of 31 December 2023, a total of 7 770 employers had failed to make pension fund contributions, contravening the Act.
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The total outstanding amount was R5.2 billion.
The issue is particularly severe in municipalities, with 58% of South Africa’s 257 municipalities failing to meet their pension fund obligations.
These 149 municipalities collectively owed R1.4 billion to the South African Local Authorities Pension Fund.
The FSCA has warned that withholding contributions after deducting them from employees’ salaries is a serious offence that could amount to theft or fraud.
The authority has pledged to continue working with the NPA and the Directorate for Priority Crime Investigation (DPCI) to ensure that offenders are held accountable.
At present, 130 cases have been opened against companies that have failed to pay over their employees’ pension contributions, according to the FSCA.
Additionally, officials from three Northern Cape municipalities – Kai !Garib, Renosterberg and Kamiesberg – were arrested for the non-payment of contributions.
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