Retirement fund contributions: recent Court ruling
Section 13A of the Pension Funds Act imposes a statutory obligation on employers to pay the retirement fund contributions they deduct from employees in terms of the fund’s rules.
There are two parts to the monthly contribution process:
- The actual contributions due and payable to the fund, and
- The supporting information schedule accompanies the deposit into the fund’s bank account. (In terms of Conduct Standard 1 of 2022: Requirements related to the payment of pension fund contributions).
The company has 7 days from month end to pay the contributions into the fund’s bank account, in other words, February’s contributions must be paid over to the fund by 7 March, at the latest. If contributions are received later than the 7th, then late payment interest is due. (The date from which late payment interest is calculated is viewed by the FSCA as starting on the day after they were due – in other words, late payment interest is calculated from the 8th.)
The implementation of the two-pot retirement system in September 2024, spotlighted the seriousness of arrear contributions – given that several members could not access their full savings pot entitlements because their employers had not paid over fund contributions. In fact, as at November 2024, 7 770 employers in the public and private sectors had been reported for failing to make timely pension contributions, with 36% of these cases occurring in the private security sector. The latest data indicated that the total arrear contributions amount to R5.2 billion.
What many employers don’t know is that Section 13A(8) of the Act stipulates that when the employer fails to pay the contributions, the individuals directly involved in managing the entity’s financial affairs shall be held personally liable for payment of the contributions, for example, the board of directors or the members of a CC.
In Section 13A(9) the Act requires that every retirement fund must request, in writing, the employer to advise of any person (or persons) who are so personally liable in terms of subsection (8). And if the employer doesn’t provide this information, then all the directors or members of a CC “shall be personally liable”.
In January 2025, the High Court of the Western Cape ruled on this in the matter of Engineering Industries Pension Fund and Another v Installair (Pty) Ltd and Others (1633/2023) [2025] ZAWCHC 8.
In this case the second respondent argued that she could not be held personally liable for the outstanding contributions because, although listed as a director, she “was not involved in the affairs of the employer and an order should not be granted against her”.
In his ruling, the Judge found that this assertion could not stand. In summary, he commented that she was a director of the company and had to accept the responsibilities that come with it. He also pointed to the fact that she is listed as a director on the Second Respondent’s own CIPRO search.
Further, the Judge commented: “I would be failing in my constitutional duty if an order is not granted to the vulnerable groups. I reiterate, that my attention is drawn to an article in the media and to the high interest in withdrawal claims from the two-pot retirement system which has exposed the failure of employers to pay pension contributions/s to funds who administer these contributions as envisaged under these unfortunate circumstances.”
There is no denying it, directors have clear personal liability when it comes to failure to pay over retirement fund contributions. Whether a company has its standalone fund or participates in an umbrella fund, those who manage the financial affairs of the business need to make sure that the legal requirements are adhered to, or face personal liability.
Secure Your Employees’ Future – And Yours – Pension contributions must be paid on time to avoid penalties and personal liability.
COOKIE POLICY
Welcome to our website.
1. Introduction
This Cookie Policy explains how we use cookies and similar technologies on our website axioconsult.com. This policy is designed to help you understand what cookies are, how we use them, and the choices you have regarding their use.
2. What Are Cookies
Cookies are small text files that are stored on your device (computer, tablet, or mobile phone) when you visit certain websites. They are widely used to enhance your online experience by remembering your preferences and actions over time. Cookies are not harmful and do not contain personal information like your name or payment details.
3. How We Use Cookies
We use cookies for various purposes, including:
- Essential Cookies: These cookies are necessary for the basic functioning of our website. They enable you to navigate our site, use its features, and access secure areas.
- Analytical/Performance Cookies: These cookies help us understand how visitors use our website. They provide information about which pages are visited most frequently, how long visitors stay on each page, and whether they encounter any error messages. This data helps us improve the performance and usability of our website.
- Functionality Cookies: These cookies allow our website to remember choices you make (such as your username, language, or region) and provide enhanced, personalised features.
- Targeting/Advertising Cookies: These cookies are used to deliver advertisements that are relevant to your interests. They may also limit the number of times you see an ad and help measure the effectiveness of ad campaigns.
4. Your Cookie Choices
You have the option to manage your cookie preferences. You can usually modify your browser settings to accept, reject, or delete cookies. Please note that if you choose to block or delete cookies, some features of our website may not function properly.
5. Third-Party Cookies
We may allow third-party service providers to use cookies on our website for the purposes outlined in Section 3. These providers may also collect information about your online activities over time and across different websites.
6. Updates to This Policy
We may update this Cookie Policy from time to time to reflect changes in technology, law, or our data practices. Any changes will become effective when we post the revised policy on our website.
7. Contact Us
If you have any questions about our Cookie Policy or how we use cookies on our website, please contact us at
By continuing to use our website, you consent to the use of cookies as described in this Cookie Policy.