FSCA: Addressing Pension Contribution Theft - Compliance Hub Insights

What the FSCA's R8.3 billion pension crackdown means for your business

There is a line that every employer under financial pressure eventually looks at, and some cross without quite realising what they have done.

You deduct pension contributions from your employees' salaries. The money leaves their payslips. But before it reaches the fund, it gets used — to cover a supplier payment, to make payroll, to keep the lights on for another month. The intention is always to catch up next month.

The Financial Sector Conduct Authority has a word for this, and it is not "cash flow."

"It is theft," says Zareena Camroodien, the FSCA's Divisional Executive for Retirement Funds Supervision. "It's also a statutory crime in terms of Section 37 of the Pension Funds Act."

The scale of it

The FSCA has published its latest list of employers in arrears on pension contributions, and the numbers should concern anyone who runs a business.

As at 28 February 2026, 16,556 employers were in contravention of section 13A of the Pension Funds Act — the provision requiring that deducted contributions actually be paid over to the fund. That figure has more than tripled in three years, from 5,430 in April 2023.

Total arrears now stand at an estimated R8.33 billion, affecting roughly 590,000 retirement fund members — ordinary employees who believe their retirement savings are accumulating, and whose money is sitting somewhere else. The arrears grew by R1.04 billion, or 14.2%, in a single year.

Here is the detail that should make every CFO pause: late payment interest now accounts for 43.5% of the total arrears. Nearly half the debt is not the original contribution at all. It is the cost of delay.

This is no longer a quiet problem

For years, unpaid contributions were something that happened privately between an employer, a fund and, eventually, an adjudicator. That era is over.

The FSCA is naming employers publicly. The latest publication is its fifth since 2023, and it specifically names 6,064 employers, selected on the severity and duration of their arrears. Your business appearing on a regulator's list of shame is a reputational event that no amount of remedial payment fully undoes.

The enforcement net is widening. The FSCA is working with the National Prosecuting Authority, the Hawks, SARS and other authorities. It intends to enforce Conduct Standard 1 of 2022 more aggressively. It has signalled tougher action not only against employers, but against retirement fund boards and company directors who fail to act.

And the ground is about to shift. The Conduct of Financial Institutions (COFI) Bill will make employers directly supervised entities of the FSCA — something they are not today. The regulator itself describes this as a game changer.

The naming strategy is already working. Roughly R1 billion in overdue contributions and interest has been recovered. That is a billion rand paid by employers who, in most cases, would have preferred to pay it quietly two years earlier.

Where the risk is concentrated — and where it isn't

The FSCA reports that approximately 77% of non-compliance sits in bargaining council funds, with just over 20% in municipalities.

It would be easy to read that and conclude this is someone else's problem. We would caution against it. Bargaining council arrangements reach deep into construction, security, engineering, road freight, hospitality and other sectors where our clients operate — often through obligations an employer inherited rather than chose. And National Treasury has already withheld equitable share allocations from municipalities over this, which tells you how seriously the state is treating it.

The concentration tells you where the fires are burning. It does not tell you that your house is not made of wood.

What directors need to understand

Three things separate this from an ordinary compliance lapse.

It is a criminal offence, not an administrative one. Section 37 of the Pension Funds Act makes it a statutory crime. Deducting money from an employee's salary and using it elsewhere is theft — a characterisation the regulator is now stating publicly and unambiguously.

Liability reaches individuals. The FSCA has explicitly signalled tougher action against company directors and fund boards. Retirement funds are being urged to report offending employers to the police more consistently. This is not a risk that stops at the company's front door.

Members have a free, fast remedy. Employees can lodge complaints with the Office of the Pension Funds Adjudicator at no cost, and the Adjudicator's rulings carry the force of court orders. Your exposure does not depend on the regulator finding you. It depends on one employee deciding to ask where their money went.

What to do now

If you deduct pension or provident fund contributions from your employees, take these steps this month, not next quarter.

Reconcile. Compare every rand deducted from payslips against every rand actually received by the fund, for the last 24 months. Not what your payroll system says was scheduled — what the fund confirms it received. The gap, if there is one, is your exposure.

Check the clock. Contributions must reach the fund within the period prescribed by section 13A. Late is late, and late payment interest compounds — it is already 43.5% of the national arrears figure. A small delay repeated monthly becomes a material liability.

Establish who is accountable. Someone in your business must own this, by name, with the authority to escalate. If your answer is "payroll handles it," you do not have an answer.

Check your bargaining council obligations. If you fall under a council arrangement, confirm exactly which fund contributions you are required to make, and whether they are current. This is where three-quarters of the problem sits.

If you are in arrears, act before you are named. Engage the fund, agree a repayment arrangement, and document it. An employer who approaches the problem is in a materially different position from one the regulator finds.

The uncomfortable truth

Every one of the 16,556 employers on that list had a reason. Trading conditions were difficult. A large debtor paid late. The bank facility was under strain. The contributions would be caught up as soon as things improved.

None of those reasons is a defence.

The money deducted from an employee's payslip was never the employer's money. It was held in trust for someone planning a retirement they may now not have. The FSCA has stopped using softer language about this, and the legislative changes coming through COFI and the amended Basic Conditions of Employment Act will remove whatever room for manoeuvre remains.

The question is not whether this catches up with non-compliant employers. It is whether they choose the moment, or the regulator chooses it for them.

082 349 1152 · info@compliancehub.co.za · compliancehub.co.za

This article is general information for business owners and does not constitute legal or financial advice.