More employers fail to pay salary deductions to pension funds
Fund members left empty-handed when they leave jobs
The pension funds adjudicator (PFA) continues to receive complaints about employers who fail in their legal obligation to pay contributions deducted from their pension fund members’ salaries to their retirement funds.
The latest culprits before the PFA are Afripoint Contracting Solutions and Tactpro Protection Services.
Rulings against these two employers follow hot on the heels of a ruling against a local authority that failed its workers in the same way.
In April, PFA Muvhango Lukhaimane took to task the Free State’s Kopanong local municipality, the board of trustees and the administrator of the SA Local Authorities Pension Fund, Fairsure Administration for failing to pay an estimated R58m in pension fund contributions collected from municipal workers to the workers’ pension fund. The transgressions occurred over the past six years.
In both the latest cases, fund members were left empty-handed when they left their jobs.
In the first case, a member of the Transport Sector Retirement Fund complained to the PFA that his employer, Afripoint Contracting Solutions, did not pay all his contributions to his fund. He worked for the company from September 2015 to January 2017.
It turned out that Afripoint registered the employee with the fund eight months after he started working and that the company was liquidated on 31 January 2017.
After he left the company, he did not receive the withdrawal benefit due to him, even though the company had deducted provident fund contributions from his salary every month.
In her determination, Lukhaimane criticised the Transport Sector Retirement Fund for not providing regular benefit statements to fund members.
“By not providing... their benefit statements, members are denied the opportunity to see if contributions are being paid (by the employer) or not,” she said.
Afripoint had a duty to pay contributions and to submit schedules to the Transport Sector Retirement Fund to show on whose behalf payments were being made. The fund, in turn had a duty to pay out benefits to members.
Unfortunately, the PFA could not issue an order to the employer to pay arrears contributions because the company had been liquidated.
“Due to the fact that the third respondent is no longer operating as a business, there is no legal entity against which an order for payment of arrear contributions can be made,” she said.
However, she instructed the Transport Sector Retirement Fund to be proactive and apply to the Financial Sector Conduct Authority for the appointment of the liquidator for Afripoint.
By not providing... their benefit statements, members are denied the opportunity to see if contributions are being paid (by the employer) or not.Pension Funds Adjudicator Muvhango Lukhaimane
The fund was also ordered to pay the complainant the money it was holding on his behalf from Afripoint for the period May 2016 to January 2017, plus interest at the rate of 10% per annum from February 2017 until date of payment.
In the second case, a security officer who worked for Tactpro Protection Services from February 20 2016 to November 3 2017 also did not receive his withdrawal benefit after leaving the company.
Tactpro acknowledged to the PFA that it deducted contributions from the security guard’s salary from March 2017 to June 2017 which were not paid over to the Private Sector Provident Fund. It also admitted that it either deliberately or negligently failed to deduct contributions from the security guard’s salary from July to November 2017.
In its defence it said that it had a contract with the Makana municipality, which was practically bankrupt and not paying its invoices. It was thus difficult for Tactpro to honour the payment of salaries to its employees. It undertook to remedy the situation and requested a reasonable time to do so.
Lukhaimane said in her ruling: “The issue of nonpayment of invoices by clients is a real issue in this industry [security] and it normally results in the employer being unable to honour its statutory duty to pay contributions in respect of its employees.
“It is a systemic problem which prejudices both employer and members in terms of payment of contributions and affect the final benefit payable upon exit from service.”
The adjudicator ordered Tactpro Protection Services to pay the arrear contributions together with late payment interest to the fund. The fund was ordered to pay the complainant his withdrawal benefit.