The initial applications for the two-pot withdrawal system revealed around 3,000 to 5,000 employers who had defaulted. However, recent figures from the Financial Sector Conduct Authority (FSCA) indicate that the issue has worsened significantly.According to the FSCA’s report earlier in the year, arrears in pension contributions have escalated to R8.33 billion, impacting nearly 590,000 members of retirement funds.
In alarming instances, some employees have seen pension deductions from their wages for over 20 years without those funds ever being deposited into their retirement accounts.
The FSCA’s newly published list of non-compliant employers includes 6,064 firms that failed to fulfill their responsibilities under section 13A of the Pension Funds Act.
This law mandates that employers remit pension contributions to the appropriate retirement funds within specific time limits.
The latest disclosure is part of the FSCA’s ongoing initiative to expose employers neglecting their legal obligations. This marks the fifth time since June 2022 that such information has been released.
The FSCA emphasized that these disclosures aim to enhance transparency and inform affected retirement fund members and stakeholders about potential issues.
“This is critical in supporting the FSCA’s ongoing efforts to protect retirement fund members and promote regulatory compliance across the sector,” the authority stated.
Over the last three years, the number of reported employers has noticeably increased.
The regulator found 5,430 employers as of April 2023, whereas the total reached 16,556 employers across 75 funds by February 28, 2026.
The current arrears of R8.33 billion reflect a rise of R1.04 billion, or 14.2%, from the R7.29 billion noted in March 2025.
One particularly troubling aspect is the duration for which these debts have remained unpaid. Late payment interest now constitutes 43.5% of the total arrears, amounting to over R3.6 billion.
The FSCA noted a 21.5% increase in interest, compared to a 9% uptick in the outstanding contribution capital.
This suggests that employers are permitting pension debts to build up over long periods without addressing them.
Arrears stretch back 15 to 20 years
The launch of the two-pot retirement system in September 2024 highlighted the severity of the issue.
Previously, many workers were unaware of unpaid pension contributions until they left their jobs or retired.
The new framework enables employees to access a portion of their retirement savings while still working, revealing previously concealed defaults.
Financial reports and regulatory documentation have brought to light instances involving struggling municipalities where pension contributions were taken from workers’ salaries but not submitted to retirement funds.
Some municipal arrears date back 15 to 20 years, as cash-strapped administrations prioritize operational costs, utility bills, and supplier payments over pension liabilities.
Bargaining council funds for various sectors, including security, manufacturing, transport, cleaning, retail, and textiles, account for a significant portion of the unpaid contributions.
These sectors make up 76.9% of the reported arrears, while local government represents approximately 21.5%.
In certain cases, employers registered employees with retirement funds but ceased making payments or inconsistently funded accounts, even while continuing to deduct employee contributions from their salaries.
Trade unions like the Public Servants Association (PSA) and COSATU have denounced the actions of defaulting employers and local governments.
“Deducting hard-earned funds from employees’ paychecks without transferring them to benefit funds is not merely administrative delay—it is outright wage theft and fraud that ruins lives when workers need their safety net most,” the PSA stated.
