Retirement fund cheats to be named

The Financial services Board (FSB) intends naming and shaming employers who deduct retirement contributions from their employees' pay packages and fail to pay the money to the funds.

In a statement, FSB deputy pensions fund registrar Jurgen Boyd said this would indicate to the government and corporates that contractors tendering for business should be required to prove they were up to date with retirement fund contributions.

"Further, we are calling on government and corporate South Africa to use moral suasion to ensure that all service providers they outsource to, are up to date with paying over employees' pension contributions."

Boyd said this could be done by way of a six monthly certification by pension fund administrators of zero arrear contributions by the relevant employers.

"As the biggest culprits appear to be employers in the private security and contract cleaning industries, the FSB is considering publishing a list on its website of those recalcitrant employers who are in arrears in paying over the provident fund and pension fund contributions of their employees."

Boyd said the list would be updated monthly and, in the interests of good corporate citizenship, companies were encouraged to scrutinise it and take the necessary steps to ensure their service providers were compliant.

At the recent Pension Lawyers' Association conference in Cape Town, it emerged that there had been an increase in the number of employers being reported to the FSB for the non-payment of contributions.

The regulator was hoping soon to impose a severe penalty on errant employers through its enforcement committee.

In the past, the non-payment of contributions was a criminal offence. However, it was decriminalised when the enforcement committee was introduced, so that non-compliant employers would not be penalised twice, Boyd said.

For employees, the effect of non-payment of contributions was that they lost their retirement savings, did not receive any investment growth and, after two months of non-payment, lost their group life assurance.

"The lost group life assurance is often the only life assurance cover fund members, particularly lower-income employees, have as protection for their families."

Boyd said most fund members, or their dependents in the case of death of a member, found out they had been short-changed only when they wanted to claim their due benefits.

"In terms of the Pension Funds Act, all contributions (from the employee and the employer) must be paid within seven days of the contributions falling due," he said.