HR Pulse

Profile

Layout

Direction

Menu Style

Cpanel

You could be liable for a R10 million fine if you don’t contribute to your employees’ pension funds!

Ivan Israelstam
ARTICLES

Before September 2007, if you didn’t contribute to your employees’ pension or provident funds, you could be held criminally liable, according to the Pension Funds Act, 1956 (PFA).

However, in 2007 this all changed. If you didn’t pay these contributions, you were no longer held criminally liable. Instead, the Registrar of Pension Funds was empowered to send you before the enforcement committee of the Financial Services Board. This committee was empowered to impose civil penalties on anyone who violated provisions of various financial services laws.

However, the registrar has not referred any cases to the enforcement committee and no one knows why this is.

A stint in jail could be in your future if you don’t contribute to your employees’ pension funds

The Financial Services Laws General Amendment Bill 2012, which was tabled in parliament in September last year, proposes that the PFA is amended to make it a criminal offence once again if you don’t pay your employees’ pension or provident fund contributions.

When the bill, which is currently before Parliament’s National Assembly Standing Committee on Finance, is made law, if you don’t contribute you could be held liable for a fine of up to R10 million and/or serve a prison term.

You could be held personally liable if you don’t contribute to your employees’ pension funds

Another penalty in the bill is that if you don’t cough up, the following people could be held personally liable:

  • The controlling shareholder of a company and each of the company’s executive directors. These directors must control or be regularly involved in the overall financial affairs of the company.

  • Each member of a close corporation who controls, or is regularly involved in, its overall financial affairs.

  • Every person (including each trustee or partner) of ‘any other body’ who issues instructions to the body which governs this ‘other body’, controls it or is regularly involved in managing ‘this other body’s’ financial affairs.

However, if the ‘other body’ is a body such as a trust or partnership, it will have a ‘governing body’ in the form of its board of trustees, partners, board of directors or other. No such board would act on the instructions of any person – instead it would issue instructions about the management of the body. It would also control that body.




BLOG COMMENTS POWERED BY DISQUS