Few employees found it necessary to check whether their employers actually paid over their pension fund contributions and those of the employer before the two-pot retirement system was implemented, and they found there were no funds in their pension funds. Now, labour inspectors must check that too. The two-pot retirement system was implemented on 1 September 2024 to give pension fund members the opportunity to access a third of their retirement savings once every year to pay for emergencies.
This was done to prevent people from resigning their jobs just to get to their pension fund money that would then be paid out in full. With thetwo-pot retirement system, two-thirds of your pension stays in the fund, even if you resign, and then you can only move it to another fund. However, there was great disappointment when people found their employers never paid over their contributions, which means there was nothing to draw from.
The biggest culprits were the private security and motor industries, as well as municipalities. Unions and employees called for government to act to stop employers from non-payment. The trustees of a pension fund could institute charges against an employer who failed to pay over employees’ contributions, but so far,only two were prosecuted.
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People wanted a faster approach. Section 34A of the Basic Conditions of Employment Act regulates the timing of payments by employers to employee benefit funds, including retirement, medical aid and other funds. On 13 January 2026, the minister of employment and labour issued a notice under section 50(9)(a) of the Basic Conditions of Employment Act, withdrawing a 2003 exclusion relating to contributions payable to benefit funds regulated under the Pension Funds Act.
With immediate effect, section 34A of the Act now also applies to benefit funds governed by the Pension Funds Act. This means that labour inspectors are now empowered to verify whether employers paid contributions into the correct funds, request proof of payment and contribution schedules and take enforcement action where employers are non-compliant. Imraan Mahomed, director and Thato Makoaba, associate for employment law at Cliffe Dekker Hofmeyr, say the notice marks a significant regulatory shift.
“Section 34A obliges an employer who deducts amounts from an employee’s salary for payment to a benefit fund to pay such amounts to the fund within seven days of the deduction. These provisions are designed to protect employees by ensuring that deducted or promised contributions reach the relevant benefit funds without delay. However, there has been much publicity around employers’ failure to discharge this duty.”
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