According to the Financial Sector Conduct Authority (FSCA), employers stop contributing to the fund mostly because of cash-flow problems. This at times could be due to lack of income or a difficult economic climate. But what do you do when you’ve been hit by the nasty surprise that your employer has failed to contribute towards your pension?
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If and when an employer fails to contribute to a fund, the Pension Fund Board has a responsibility to recover such contributions from an employer and to inform the members of the non-payment, says the FSCA.
Section 13A(1) of the Pension Fund Act (PFA) places a responsibility on an employer to pay to the fund in full any contribution which, in terms of the rules of the fund, is to be deducted from the member’s remuneration, and any contribution for which the employer is liable in terms of those rules.
Section 37(1) of the PFA makes the non-payment of such contributions a criminal offence.
“The Board of a retirement fund is obligated to report the employer’s failure to pay contributions to its members (employees), says the FSCA.
Furthermore, such failure should also be mentioned in the member’s annual benefit statements which will provide a member with an indication of the effect it will have on his or her overall benefit.
Members also have the right to request such information from the fund if they suspect that the employer is not paying contributions.
Members of boards of retirement funds are also obliged to bring this non-compliance under the attention of the FSCA.
However, an employee can report the non-compliance to the office of the Pension Funds Adjudicator (PFA) or open a criminal case at the nearest police station.
Fast facts about lodging a complaint to the PFA
- Before you complain to the PFA, you must lodge a complaint to your fund or employer. If they don’t respond within 30 days, or you’re not satisfied with their response, you can submit your complaint to the PFA.
- According to the PFA, you must complete a complaint form (it’s available online on the organisation’s website) and return it with a copy of your ID and proof of fund membership (benefit statement and/or salary slip) and any other documentation relating to your complaint.
- When making allegations against your employer, you should set out the facts supporting the allegation and the conclusions you have drawn from those facts.
- The adjudicator can’t investigate a complaint if the event it relates to occurred more than three years before the complaint was lodged unless there is a good reason.
Can you ask for reimbursement from the employer?
According to the FSCA, employers are not allowed to pay you back directly.
“Employers must pay the arrear contributions plus interest to the applicable fund and not directly to the employees,” says the FSCA.
However, members (employees) may take steps to ensure that the employer pays the contributions to the fund.
In instances where an employer does not pay such contributions to the fund, the matter can be reported by the member to the pension funds adjudicator who can order the employer to pay such arrear contributions to the fund.
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