Admin
03 Oct, 2025
Open letter to the Financial Sector Conduct Authority, National Treasury and the government of South Africa on pension arrears
Mr Enoch Godongwana, MP Minister of Finance Private Bag X115 Pretoria 0001 and Mr Velenkosini Hlabisa, MP Minister of the Department of Cooperative Governance and Traditional Affairs Private Bag X802 Pretoria 0001 and Commissioner Unathi Kamlana Financial Sector Conduct Authority PO Box 35655 Menlo Park 0102 Dear Minister Godongwana, Minister Hlabisa and Commissioner Kamlana An open letter to the Financial Sector Conduct Authority, National Treasury and the government of South Africa on pension arrears 1. The United Democratic Movement (UDM) writes with grave concern about the worsening crisis of unpaid pension contributions, recently highlighted by the Financial Sector Conduct Authority (FSCA). According to the FSCA, employers across South Africa owe more than R7.29 billion in pension arrears, affecting nearly 600,000 workers. 2. This is not only a financial scandal; it is a betrayal of trust. Pensions are not perks; they are deferred wages. For thousands of workers, the discovery that contributions deducted from their salaries were never paid over to pension funds has caused shock and despair. Many only became aware of this painful truth when attempting to access their savings under the two-pot retirement system in September 2024. 3. The introduction of the two-pot retirement system was meant to improve financial security by splitting new contributions into a savings pot, from which one withdrawal can be made each year, and a retirement pot, which remains locked until retirement. Instead of providing relief, the system has exposed the depth of the arrears crisis. When workers tried to make their first withdrawals, many discovered that their contributions had never been transferred to their funds. What should have been a safety net has become proof of betrayal, leaving workers with empty accounts where their savings should have been. 4. Families who are already struggling with rising costs of living now face the indignity of poverty in their old age because of the failures of their employers and the weakness of the regulatory framework. 5. As a party within the Government of National Unity (GNU), the UDM sees it as our duty to exercise firm oversight from within, ensuring that government does not turn a blind eye to failures that harm workers and their families 6. The scale of the crisis 6.1. The arrears problem is no longer marginal; it is systemic. Arrears surged by 40% in one year to reach over R7 billion. Nearly 600,000 workers are affected, with many still in employment and others already retired. Over 1,000 cases have been referred to the South African Police Service, and more than 8,000 instances of legal action have been initiated by retirement funds. Yet, prosecutions remain limited and recoveries slow. 6.2. This problem is not confined to small businesses. Large provident funds such as the Auto Workers Provident Fund and the Motor Industry Provident Fund account for the bulk of legal actions, and government itself has emerged as one of the biggest culprits. 7. Accuracy and transparency of data 7.1. While the scale of the arrears is shocking, there are also concerns about the accuracy of FSCA data. Reports have shown that some employers named in arrears lists insist they had made payments, but that the arrears were still reflected because of delays in updating data, incomplete reporting by funds, or administrative errors. 7.2. Such inaccuracies undermine trust in the regulatory system, cause reputational harm to compliant employers, and create confusion for workers. Transparency only has value if the information is accurate and up to date. Workers and Parliament need figures they can rely on. 8. The systemic weaknesses 8.1. The UDM acknowledges steps the FSCA has taken, including publishing arrears lists, collaborating with Treasury and the Hawks, recovering R39 million and R50 million from municipalities through withheld transfers, and securing court orders against delinquent municipalities and company directors. These are important interventions. 8.2. However, they remain insufficient. The FSCA itself admits that it lacks full powers over employers until the Conduct of Financial Institutions (COFI) Bill is passed into law. Enforcement is slow, arrears continue to grow, and some retirement fund trustees are failing to act decisively against non-compliant employers. In the meantime, workers continue to suffer while billions in deferred wages are withheld. 9. Accountability and governance 9.1. It is especially alarming that government itself (through national and provincial departments and municipalities) is among the biggest culprits, owing an estimated R1.5 billion despite Treasury interventions. Municipalities in particular are repeat offenders, often defaulting again even after arrears are recovered through withheld equitable share transfers. National and provincial departments are not immune either. 9.2. This is unacceptable. When the state itself is in breach, it weakens public confidence in the entire system and sets a terrible example for private employers. The UDM cannot remain silent while the state itself is one of the worst offenders. We will use every platform in Parliament, including SCOPA, to hold both our partners and ourselves to account. Leadership cannot demand compliance from others while defaulting on its own workers’ pensions. 10. In light of the above, the United Democratic Movement calls for urgent action on the following: 10.1. The Minister of Finance to prioritise the Conduct of Financial Institutions Bill and for the Portfolio Committee on Finance to fast-track its passage through Parliament, so that the FSCA is fully empowered to act against defaulting employers. 10.2. The FSCA, working with National Treasury, the Hawks and the National Prosecuting Authority, to enforce the law through criminal charges, asset seizures and by holding directors, officers and municipal managers personally liable. 10.3. The FSCA to continue publishing arrears lists, but to strengthen them by ensuring accuracy, providing sectoral breakdowns, and reporting not only on arrears but also on recoveries and enforcement actions, so that workers, Parliament and the public can track real progress transparently 10.4. National Treasury and Minister Velenkosini Hlabisa, in his role as Minister of Cooperative Governance and Traditional Affairs, to intervene firmly in delinquent municipalities and government departments, with SCOPA exercising oversight to ensure that such failures do not repeat. 10.5. The FSCA to act against trustees who neglect their duty to recover contributions from defaulting employers. 10.6. National Treasury to put in place interim protection measures so that workers making use of the two-pot system are not left destitute because of employer failures. 11. Conclusion 11.1. South Africa cannot tolerate a situation where nearly R7.3 billion in pensions is left unpaid while workers go hungry and pensioners live in indignity. Pensions are deferred wages earned through years of labour and withholding them is nothing short of theft from the future. 11.2. Being part of the GNU does not mean turning a blind eye. It means doubling our vigilance. The UDM will continue to play its role by exercising firm oversight inside government to safeguard the rights of workers and ensure public money is used with integrity. Yours sincerely Mr NLS Kwankwa, MP Deputy President of the United Democratic Movement Party Leader in Parliament Copied to: Ms Nomakhosazana Meth, MP - Minister of Employment and Labour Mr Songezo Zibi, MP - Chairperson of the Standing Committee on Public Accounts Dr Mkhacani Maswanganyi – Chairperson of the Standing Committee on Finance Mr Makhosonke Maneli – Chairperson of the Portfolio Committee on Employment and Labour Dr Zwelini Mkhize – Chairperson of the Portfolio Committee on Cooperative Governance and Traditional Affairs Ms Thandi Nontenja, MP - UDM Member on the Standing Committee on Public Accounts
Admin
29 Dec, 2017
#PIC #GEPF: employees lost R12bn of pension money with Steinhoff corruption! Any political party that (may) have benefitted through #Steinhoff should: #PayBackTheirMoney
Of course, the call to “pay back the money” was a legitimate demand for the return of taxpayer money illegitimately used to fund Nkandla, the “Gupta industry” and other sinister personal gains. Right now, there are other monies that should be paid back; that should be returned from whence it came. The Steinhoff debacle shows that corruption and unethical behaviour place people in the path of clear and present danger. The Public Investment Corporation (PIC) who invests and manages funds on behalf of the Government Employees Pension Fund (GEPF) announced on 13 December, a week after the Steinhoff collapse that: “It is important to note that notwithstanding the collapse in the Steinhoff share, the GEPF portfolio remains financially healthy, because of its diversified nature. It is also important to note that GEPF members’ benefits will not be changed by these developments, given that the GEPF is a defined benefit pension fund.” GEPF’s Steinhoff loss was 0.6% of its portfolio on 6 December. This means that for every R100 of GEPF value sixty cents were lost. Even if this could be described as a manageable setback, the reality remains that the Steinhoff debacle cost the PIC R12 billion! This is a dangerous situation, where civil servants’ pensions are adversely affected no matter who downplays the scenario. The Steinhoff powers that be should provide guarantees that this R12 billion will not disappear into nothing and that the money shall be paid back to government employees. On another note, perhaps the Steinhoff saga is also a turning point in private political party funding looking at the African National Congress and the Democratic Alliance’s refusal to lay bare their books. If perhaps they, or any other political party, benefitted in any way from Steinhoff they should also be held to account. Given that the PIC has invested in Steinhoff, each and every political leader, should own up and confirm or deny that their parties (and/or functionaries) have accepted money from any source associated with Steinhoff profits. Any and all Steinhoff related money, and every cent, must be returned, with interest, to the coffers of the providers of compromised money, to set off that R12 billion loss in government pensions. Why should workers lose money to greed and corruption? Issued by: Mr Bantu Holomisa, MP and UDM President
