“This is of great concern to the OPFA as fund non-compliance, and section 13A matters have been a consistent feature over the years and continue unabated to the detriment of pension fund members,” said the Pension Funds Adjudicator, Muvhango Lukhaimane.

The OPFA received 8 858 new complaints between 1 April 2021 and 31 March 2022, over and above the 2 109 cases it carried over from the previous financial year. It closed 8 382 of those.

Although the number of complaints was still lower than pre-pandemic levels, the proportion of those relating to non-payment of retirement contributions is increasing. Those made up 40% of complaints received by the OPFA in 2021/22, coming second to grievances about withdrawal benefits.

Contribution-related complaints have increased to 40.55% from 24% in the 2020/21 financial year. Contributing to this is the fact that some retirement funds are not adequately discharging their obligation to ensure the collection of these contributions.

Section 13A of the Pension Funds Act stipulates that employers must pay contributions to the pension funds in which they participate. Yet there have been many high-profile cases in SA where parties responsible for making these payments on behalf of members failed to do so.

These include the governing party and the suspended Property Practitioners Regulatory Authority’s (PPRA) CEO, Mamodupi Mohlala. The authority’s investigation found that she contravened pension laws by failing to make contributions to the PPRA’s retirement fund and appointed people irregularly. She was also blamed for irregular, fruitless and wasteful expenditure.

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The Act states that when an employer fails to pay these contributions on the due date, they should be liable for late payment interest. It also makes non-compliance an offence, with sanctions varying from fines not exceeding R10 million to imprisonment for up to 10 years.

The OPFA said while it was understandable that employers faced financial challenges in the recent past, it should not be acceptable that pension fund members must bear the brunt. The consequences are dire for members, who usually find out when they try to claim that their employers were not paying their retirement contributions.

In one example cited in the Pension Fund Adjudicator’s annual report, an employee of the Maluti A Phofung Municipality died in September 2018, a month before his employer’s group life insurance scheme was reactivated. It was deactivated in October 2017 following the municipality’s failure to pay contributions to the retirement fund, which provided group risk benefits, including death cover.

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After resuming the payment of current and area contributions, the municipality reactivated the risk benefits a year later and a little too late. The group life assurance benefit only became effective on 1 October 2018, a month after the member died.

The member’s son submitted a complaint to the OPFA in August 2021 about the absence of risk benefits at the time of his death. But the adjudicator could not hold the retirement fund accountable. The risk portion had been removed from the deceased’s benefits at the time of his death. So, the family didn’t get any death benefits.