Fired but still entitled to a pension? What the law says about dismissed state officials

When a government official is fired, many South Africans assume they lose everything, including their pension.

However, labour attorney Ulrich Roux says dismissal and pension forfeiture are two separate legal issues.

The recent dismissal of organised crime boss Maj-Gen Richard Shibiri has sparked public interest in what happens to the retirement benefits of senior state officials who are removed from their positions for misconduct.

According to Roux, dismissal does not automatically strip a government employee of pension benefits accumulated during years of service.

“The disciplinary dismissal of a public servant does not automatically result in the forfeiture, reduction, or cancellation of accrued pension benefits,” Roux told TimesLIVE.

He said retirement benefits that have already accrued remain protected, and that dismissal ordinarily affects only the employment relationship and any future accumulation of pensionable service.

Roux said the state’s ability to interfere with pension benefits is strictly regulated by law.

“Allegations of misconduct or a disciplinary finding alone do not entitle the state to seize or deduct pension benefits,” he said.

According to Roux, pension benefits may only be withheld or reduced where there is a lawful basis to do so.

“The relevant inquiry is not whether the member was dismissed, but whether a lawful basis exists for withholding or deducting any portion of the accrued benefit,” he said.

Roux explained that one of the circumstances in which deductions may be permitted is where the state seeks to recover losses arising from theft, fraud, dishonesty or misconduct.

“In respect of losses suffered by an employer, section 37D(1)(b)(ii) (of the Pension Funds Act) permits deductions only where the employee has acknowledged liability in writing or a judgment has been obtained against the employee by a court of competent jurisdiction,” he said.

He added that courts have also recognised that pension benefits may be withheld temporarily while an employer pursues legal proceedings to recover losses allegedly caused by an employee’s dishonest conduct.

Importantly, Roux said, pension benefits cannot be withheld indefinitely, and employers must pursue recovery claims without unreasonable delay.

Roux also dismissed the notion that a criminal conviction automatically results in the loss of pension benefits.

“While a criminal conviction for offences such as corruption, fraud, theft, or dishonesty may strengthen an employer’s prospects of obtaining a civil judgment or compensation order, the conviction itself does not extinguish the member’s pension rights,” he said.

For public servants approaching retirement age, Roux said the position is largely unchanged.

“As a general legal principle, dismissal shortly before retirement does not ordinarily deprive the member of accrued benefits,” he told TimesLIVE.

“The member would generally remain entitled to receive the actuarial value of the pension interest or withdrawal benefit accumulated up to the date upon which employment terminated.”

Dismissal ordinarily terminates the employment relationship and the further accrual of pensionable service, but it does not extinguish accrued pension rights

—  Labour attorney Ulrich Roux

Roux said the most common misconception is that dismissal automatically results in the loss of pension benefits.

“The above-mentioned conceptions are incorrect. Dismissal ordinarily terminates the employment relationship and the further accrual of pensionable service, but it does not extinguish accrued pension rights,” he said.

TimesLIVE