The Pension Funds Adjudicator has ordered the Private Security Sector Provident Fund (PSSPF) to submit a report to her and the Registrar of Pension Funds about the failure of the administrator of the fund to comply with the law. This follows yet another complaint to her office involving a security company that did not fulfil its obligations to the fund.
Muvhango Lukhaimane, the adjudicator, noted with concern that the administrator, Absa Actuaries and Consultants, had not allocated contributions paid by the employer to members’ fund balances (fund credit), despite the fact that the employer had paid some contributions and provided some schedules.
A security guard, VM Ntuli, complained to Lukhaimane that he was not paid a withdrawal benefit when he left his employer, Top Ten Catering and Security CC, although contributions to the fund had been deducted from his salary during his period of employment, between 2010 and 2013.
The failure of employers to pay contributions over to the PSSPF is a long-standing problem, and at one stage the fund was the subject of 60 percent of the complaints to the adjudicator’s office.
The adjudicator has made numerous orders against employers in the security sector, where it is compulsory for employees to belong to the fund, but they continue not to pay their contributions or the contributions they deduct from their employees’ salaries.
According to the latest determination, the fund told the adjudicator that a benefit could not be paid to Ntuli because the fund had not received all the contribution payments and information from Top Ten Catering and Security about which employees were contributing to the fund. Therefore, contributions had not been allocated to Ntuli’s fund credit.
The PSSPF said that if Ntuli had been employed throughout the period he claimed he was, the employer had defaulted on the payment of some contributions on his behalf.
If your employer does not pay contributions to your retirement fund, your fund will pay you a partial benefit when you withdraw or retire from the fund.
Top Ten Catering and Security failed to respond to Ntuli’s complaint.
Lukhaimane ordered Top Ten Catering and Security to:
* Properly register with the PSSPF,
* Submit all outstanding schedules showing the contributions of each employee for the period between 2010 and 2013; and
* Pay the outstanding contributions, plus interest of 15.5 percent a year.
She also says it is clear from numerous responses that the fund has given to complaints before her office that Absa Actuaries and Consultants is failing to perform its duties in terms of the Pension Funds Act.
The Act obliges an employer to pay contributions to the fund to which its employees belong and to provide the fund with a schedule of employees for whom contributions are being made, by the seventh day of the month after which the contributions become due.
The board of trustees is required to monitor compliance with this section of the Act – a duty it can delegate to an administrator. The employer can be charged interest for paying late.
If payment has not been made within 90 days, the fund should report the matter to the National Prosecuting Authority. In addition, the fund must inform the Registrar of Pension Funds in writing of the employer’s failure to pay contributions and state what action it has taken to recover the money.
The Act obliges the administrator to keep proper records, but if it does not receive the required information from an employer, this can delay its detecting the underpayment of contributions.
Lukhaimane notes in her determination that the board has not taken any action to remedy the failure by the administrator to comply with the Act. For this reason, she says, it is “vital” that the board of trustees of the PSSPF account to her office and the Registrar of Pension Funds for the lack of compliance with the Pension Funds Act in allocating members’ contributions.
An amendment made to the Pension Funds Act last year makes members of close corporations, company managing directors, trustees and partners personally liable for an employer’s failure to pay contributions to a fund.
At the recent Institute of Retirement Funds Africa conference, Rosemary Hunter, the deputy executive officer for retirement funds at the Financial Services Board (FSB), said the FSB was looking at ways of monitoring the poor collection of contributions and was talking to the police about prosecuting employers. However, trustees need to take more action and more quickly, she said.
Hunter suggested that trustees report employers’ failures to pay contributions to members by way of cellphone messages so that employers would have to face their own employees.