The FSCA says arrear contributions affect the retirement savings outcomes of 310 000 members.

Outstanding contributions are sitting at R5.2 billion ($$275.76 billion), of which R1.4 billion is owed by the local municipality sector.

The regulatory body says these unpaid contributions not only undermine the ability of the retirement fund to meet their commitments but also place member savings at risk.

The FSCA says it will be increasing its supervision on funds and administrators, particularly in the private security sector, which has a high number of employers and issues related to unpaid pension contributions.

The regulatory body has revealed that 36 percent of employers in the private security sector are behind with their pension fund contributions.

FSCA deputy commissioner Astrid Ludin says they are looking at ways to address this problem.

“But of course this does have significant long-term and even short-term impact on members because it also affects the risk benefits that people might have. Because if your risk benefits aren’t up to date, something happens a member passes away, those benefits are affected and it has a significant impact on the families.”

The law requires pension funds to notify employees if their employers are not up to date with retirement contributions.

FSCA Commissioner Unathi Kamlana says since publishing the names of defaulting employers almost 1 000 employers have taken action to clear the arrears.

“We will continue with this and as we have just published our third publication. And as part of consumer awareness and advocacy, this will remain the centrepiece of that of that strategy to address noncompliance to directly protect members hard earned savings.”

Kamlana emphasised the work of the regulator is not to set fees but assess their fairness.

He noted that they are working on a long-term solution through the Conduct of Financial Institutions Bill, which they are working on with the National Treasury to enhance compliance.

“Which is yet to be tabled in Parliament because in that bill we get an additional jurisdiction over employers who provide provident and pension funding benefits. So that we can be able to enforce directly their compliance with Section 13 Capital A of the Pension Fund act. Because right now, we depend on an indirect enforcement mechanism.”

At the same time, the FSCA remain actively engaged with law enforcement agencies and institutions like SARS to ensure accountability for those responsible.

Local government has also been identified as a major offender with nearly two thirds of municipalities reportedly in arrears as in March this year.

Senior Analyst for Retirement Funds at the FSCA ,Keabetswe Tsuene says the problem is more pronounced in the Free State, where 70% of municipalities are in arrears with pension fund contributions.

“I suppose that speaks to, you know, the governance issues that we have heard about in the in the Free State as well. Interestingly, we also have seven municipalities in Gauteng, those speak to some distressed municipalities. You also have, you know, perhaps the City of Ekurhuleni Metropolitan Municipality. That could most likely be referred to as historical arrear contribution.”

The FSCA will continue to monitor the impact of withdrawals on funds, following the initial activity earlier this year and expect withdrawals particular in December and January.

In the new financial year, the body is anticipating a pick-up in withdrawals from April as people can access withdrawals annually.


--SABC--