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More retirement funds are reporting employers who fail to pay workers’ pension contributions to the Financial Sector Conduct Authority (FSCA), as the regulator steps up its crackdown on companies that leave employees out of pocket.
The FSCA said the rise in reported cases is an encouraging sign that retirement fund administrators are becoming more willing to hold defaulting employers criminally accountable.
The regulator said the nonpayment of retirement fund contributions remains one of the most widespread forms of financial misconduct affecting workers in SA.
The problem has become a major focus for the watchdog, which is now in the fourth year of a dedicated project aimed at tackling the issue, said the FSCA in its latest annual report prepared by commissioner Unathi Kamlana.
Employers are legally required under section 13A of the Pension Funds Act to deduct retirement fund contributions from employees’ salaries and pay them, together with the employer’s own contribution, to the relevant retirement fund on time.
When employers fail to do so, workers suffer financially because their retirement savings are reduced. They may also lose insurance benefits linked to active membership of their retirement fund.
Kamlana said they have seen a notable increase in the number of cases reported by retirement funds.
The non-payment of pension fund contributions is a criminal offence under the Pension Funds Act ...
— Financial Sector Conduct Authority
“The nonpayment of pension fund contributions is a criminal offence under the Pension Funds Act, and effective deterrence requires criminal prosecution of employers who continue to ignore the law,” the regulator said.
It said the growing number of reports shows increasing awareness among retirement funds and a stronger willingness to pursue criminal action against employers who fail to meet their legal obligations.
Strengthening enforcement
To support these cases, Kamlana said the FSCA is working closely with the SA Police Service and National Prosecuting Authority to improve criminal enforcement against offending employers.
The regulator has also strengthened its reporting system. During the reporting period, 55 retirement funds submitted section 13A reports, leading to 315 online cases being opened through the FSCA’s reporting platform.
About six retirement funds are still moving onto the online reporting system, with the migration expected to be completed during the 2026/27 financial year.
According to the FSCA, the quality and speed of reporting have improved significantly after officials held direct engagements with retirement funds and administrators to review submissions and provide guidance on how reports should be completed.
The regulator said it also engaged directly with employers who had failed to pay contributions, helping recover part of the outstanding money owed to workers. However, it warned that a substantial amount remains unpaid.
Last year, the FSCA also published a list of employers that had failed to pay retirement fund contributions. It said naming defaulting employers is intended to discourage non-compliance and alert workers and the public to companies breaking the law.
The regulator has also worked with several institutions to strengthen enforcement.
Kamlana said the National Treasury agreed to recognise retirement funds owed contributions as preferred creditors when municipalities have their equitable share allocations withheld. The FSCA submitted lists of municipalities in arrears during 2025 to support this intervention.
One retirement fund reported recovering about R39m between November 2024 and April 2025 through this process.
By the beginning of July, dozens of municipalities owed R1.7bn in unpaid contributions, and this was one of the reasons that finance minister Enoch Godongwana decided to withhold the equitable share from at least 69 municipalities.
Unions’ outrage
Unions also expressed outrage at the amount that was not being paid over by municipalities to fund administrators.
“Workers are already bearing the burden of wage freezes, austerity, collapsing municipal services and deteriorating working conditions,” the SA Federation of Trade Unions said in a statement.
“They cannot now be expected to discover, at retirement, that the pension contributions deducted from their salaries have simply disappeared. The constitutional obligation of the state is to protect workers — not to rob them."
The auditor-general has also decided that municipalities that fail to pay retirement fund contributions will have the matter treated as a material irregularity in their financial statements, even if payment arrangements have been made.
Kamlana said the FSCA believes this will increase accountability at municipal level.
Looking ahead, the regulator says it will continue publishing the names of defaulting employers, improve the quality of employer information, strengthen partnerships with other authorities and support criminal prosecutions.
“The FSCA remains committed to ensuring that employers who wilfully fail to honour their obligations to employees’ retirement savings are held accountable,” the regulator said.
