When it comes to payment of retirement-fund contributions, one might have expected better of the governing ANC. Actually, not really.
These can’t be the happiest times for Paul Mashatile, treasurer-general of the African National Congress and member of its top six (or is it top five?).
Apart from all the other political turmoil that engulfs him, if the Sunday Times is to be believed (and when is it not to be believed?) he’d also be the party’s front man in addressing staff retrenchments, late salary payments, a multi-million rand bill for unpaid paye taxes (R80m at one stage) and a debt (around R140m when he took office) owed to its provident fund.
Whoever is responsible for the latter should, at the least, be publicly identified. It brings into sharp relief, at the highest level, one of the biggest problems that afflicts the retirement-fund industry.
Once the contribution has been deducted from the employee’s salary, its non-payment to the fund means that the employee loses out on retirement benefits and is further prejudiced by the absence of investment.
Potentially worse, what’s happened to the money? Is it still intact for payment to the fund, and what if it isn’t; for example, been (mis)appropriated to assist the employer’s operating expenses?
Year in and year out, Pension Funds Adjudicator Muvhango Lukhaimane emphasises that “the continued non-payment of fund contributions by employers is of great concern”.
In the latest annual report of her office, the then board chair (and Financial Sector Conduct Authority acting commissioner) Abel Sithole noted that the greatest number of complaints to the Adjudicator related to non-compliance with s13A of the Pension Funds Act. It deals with non-payments by employers of employees’ contributions.
The Office of the Adjudicator had taken a policy position to refer back s13A-related matters to the fund and request that it provides proof of legal compliance before considering relief, he said: “This will assist in identifying exact points of failure in the value chain and ensure that determinations…clearly identify root causes and those responsible for possible further action by the regulator.”
In 2014 it was provided under the Financial Laws Amendment Act that “every director who is regularly involved in the management of the company’s overall financial affairs” would be personally liable for the payment of fund contributions. Retirement funds were required to request employers to identify these people.
In addition to the possibility of these relevant people being held personally liable for payment, they could also be subject to criminal sanction.