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PFA ruling should urge employees to confirm they are in fact registered with a provident fund

13 March 2014 Muvhango Lukhaimane, Pension Funds Adjudicator

The illegal practice of employers failing to register with a provident fund whilst deducting employees’ contributions which are not paid over has again come under scrutiny in a recent determination by the Pension Funds Adjudicator Ms Muvhango Lukhaimane.

The ruling should also urge employees to ensure they are registered with a provident fund even though they may be paying provident fund contributions.

A provident fund was also rapped on the knuckles by Ms Lukhaimane for failing to compel a company to register as a participating employer.

ATD Security CC, trading as W R S Security Services (second respondent), deducted R187 .50 monthly from the salary of JO Selebogo as a provident fund contribution.

However, Mr Selebogo who had commenced employment on 1 November 2007 complained to the Office of the Pension Funds Adjudicator (OPFA) that he had never received a benefit statement from the Private Security Sector Provident Fund (first respondent) confirming his membership and the amount of his fund credit. As a result, he did not know whether or not the money that had been deducted from his salary was remitted to the first respondent on his behalf.

The first respondent submitted to the OPFA that according to its records, the second respondent was not registered as its participating employer and, therefore, it had no record of the complainant. It further submitted that the second respondent had not applied for nor been granted an exemption from participating in the first respondent.

The first respondent added that since the complainant was not its member, no benefit payment was due to him. It requested that the complaint against it be dismissed.

Although the second respondent was granted an opportunity to comment on the allegations made against it, no response was received.

In her determination, Ms Lukhaimane said in terms of the first respondent’s rules, "all
employers in the private security sector shall participate in the fund”. The first respondent’s rules also stipulated that "each eligible employee shall, as a condition of employment, become a member of the fund”.

"The complainant has provided this Tribunal with a copy of his payslip, which indicates that the second respondent indeed deducted provident fund contributions from his monthly salary.
"It is, however, apparent that the second respondent failed to register itself as a participating employer of the first respondent and the complainant as the member of the first respondent in violation of Rules 3.1 and 3.2 of the first respondent’s rules.

"The second respondent ought to have registered as a participating employer in the first respondent on 1 September 2002, as this is the commencement date of the first respondent.

"The complainant commenced employment with the second respondent on 1 November 2007. The second respondent ought to have registered the complainant as a member of the first respondent from May 2008 following the expiry of his six months of continuous employment in the private security sector.

"However, the second respondent failed to register the complainant from May 2008. Therefore, the first respondent’s failure is in contravention of Rule 3 of the rules of the first respondent.”

Ms Lukhaimane said the second respondent had a duty placed on it by the provisions of section 13A(1)(a) of the Pension Funds Act and the rules of the first respondent to pay contributions and submit schedules to the first respondent indicating on whose behalf payment is being made, and the first respondent in turn has a duty to pay out benefits to the members.

She also said the first respondent was a fund established in terms of the Sectoral Determination 6: Private Security Sector, South Africa.

"It is clear that it is compulsory for all employers in the private security sector to participate in the first respondent as prescribed in the sectoral determination.

"It is also compulsory for all employees in the private security sector to join membership of the first respondent.

"The first respondent is required to take all reasonable steps to ensure compliance with the sectoral determination by compelling all employers in the private security industry to participate in it and also to register their employees as its members.

"The first respondent is also required to ensure compliance with section 13A(1)(a) of the Pension Funds Act by compelling defaulting employers to pay outstanding contributions in respect of their employees.

"In the present case, the first respondent was equally required to compel the second respondent to register as a participating employer and also register its employees.

"It is the responsibility of the board of the first respondent to report non-compliance with the sectoral determination to the Registrar of Pension Funds whose mandate is to enforce non-compliance with the Act.
 
"However, the first respondent failed to comply with its responsibilities and as a result, the second respondent is not registered as a participating employer and also the complainant is not registered as a member,” said Ms Lukhaimane.

She was also scathing of the Private Security Industry Regulatory Authority (PSIRA) which in terms of the Private Security Industry Regulatory Act was required to ensure employers in the private security sector complied with the sectoral determination.

"It is also the responsibility of PSIRA to take legal action and/or report non-compliance with the sectoral determination regarding the employers’ participation in the first respondent and also registering their employees as members of the first respondent. However, PSIRA has also failed to comply with its responsibilities,” Ms Lukhaimane said.

Ms Lukhaimane requested that the first respondent and PSIRA forward the second respondent’s non-compliance with the sectoral determination and the rules of the first respondent to the Registrar of Pension Funds

She ordered the second respondent to register with the first respondent as its participating employer from 1 September 2002 and to register the complainant as a member of the first respondent from May 2008 to date.

The second respondent was also ordered to submit all outstanding contribution schedules from May 2008 to date to the first respondent in order to facilitate the computation of the complainant’s arrear contributions.

The first respondent was also ordered to pay to the first respondent arrear contributions together with late payment interest.

The first respondent was ordered to provide the complainant with a copy of his latest benefit statement, within two weeks of receiving payment from the second respondent.

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