Cosatu expresses grave concern over the alarming rise in employers defaulting on pension fund contributions, revealing a staggering R8.33 billion owed to 590,000 workers. This growing crisis threatens the financial security of South African workers and their families.
Image: Morgan Morgan / DALL-E / DFA / Illustration
The Congress of South African Trade Unions (Cosatu) has been deeply alarmed by the growing number of employers defaulting upon workers’ pension fund contributions.
The latest reports from the Financial Sector Conduct Authority (FSCA) tasked with overseeing good governance in our pensions funds, shine a powerful spotlight in what can best be described as a national crime scene.
16 566 employers are in arrears to 75 pension funds for an estimated R8.33 billion affecting 590 000 workers. This is a tripling of the number of employers involved since 2023 and a 14% increase in monies outstanding since 2025.
Sectors where this theft of workers’ hard-earned monies is most prevalent are in the security, cleaning and transport sectors as well as local government.
In some instances, this can be seen as an indicator of cash strapped employers struggling to stay afloat and this may be the case with some essentially broke municipalities.
No matter what the cause may be, it is a criminal offence. It is the theft of workers’ monies. It is fraud when employers state on their salary slips that the monies have been paid to the pension funds. It is a criminal activity to report monies deducted for pension funds to the South African Revenue Service (SARS) when that has not been done.
It is estimated that less than 10% of South Africans are able to save enough money to ensure that they can retire in comfort. This mass theft of workers’ pension funds by some employers compounds an already dire savings crisis. It not only affects these workers but also their many dependents, a challenge worsened by a staggering 43.7% unemployment rate.
In most instances it is not only pension fund contributions that these employers are defaulting on but also other third-party payments, e.g. medical aids, disability and life insurance, unemployment and occupational injury and disease insurance, and income tax payments. Again, workers pay the price when their medical aid or insurance policies lapse, or their taxes are not paid.
The FSCA has played an important role in shining the spotlight on this national crisis. What is needed is a decisive set of interventions to tackle this ticking time bomb. If it is not dealt with, then we should not be surprised one day when angry workers decide to take the law into their own hands.
One of the unintended benefits of the Two Pot Pension Reforms initiated and driven by Cosatu has been that workers now regularly check their pension fund statements. This will be a critical turning point for workers to be aware of what’s in their funds and whether their employers are transferring their payments.
In short, the reforms have incentivised workers to begin policing employer compliance.
Cosatu has raised this matter at Nedlac and received countless less than inspiring reports from the South African Local Government Association, the Security and Transport Bargaining Councils amongst others. It is clear that they couldn’t be bothered by the rampant looting taking place by their members under their watch.
Cosatu was able to secure a progressive agreement at Nedlac with the Department of Employment and Labour to empower labour inspectors to include checking pension fund compliance during workplace inspections from 2026.
In one of the most important interventions in defence of workers’ rights by the African National Congress led administrations has been to substantially increase the number of labour inspectors from 1 200 in 2020 to 2 000 today. 20 000 contract labour inspectors are being employed as part of the Presidential Employment Stimulus.
In the 2026 State of the Nation Address, President Cyril Ramaphosa, announced plans to employ a further 10 000 permanent labour inspectors over the next three years bringing the total number of permanent inspectors to 12 000 with the support of 20 000 contract inspectors. We have already begun to see the fruits of these investments with a significant increase in the number of workplace inspections.
As many of these delinquent employers are located in sectors with bargaining councils, e.g. security, cleaning and local government; it is critical that these councils crack the whip and act to ensure their members abide by their collective agreements and our pension laws.
Employers who do not honour their legal obligations should be deregistered by the Companies and Intellectual Property Commission as well as the Private Security Industry Regulatory Authority in the case of the security industry.
Treasury should blacklist them from doing business with the state at all levels, e.g. national, provincial and local government as well as entities and state-owned enterprises.
Whilst we are deeply concerned by Treasury’s withholding the Equitable Share payments to 69 defaulting municipalities, we are hopeful that it will help ensure that local government will get its house in order and pay municipal workers’ pension funds timeously as well as settling outstanding contributions.
Cosatu will be publicising the list of delinquent employers cited by the FSCA’s public reports. Workers need to know which employers are stealing from their pension funds. We will be making sure shop stewards challenge these employers at their workplaces to pay their monies.
Discussions are needed on how to further empower the FSCA to take action against defaulting employers.
Similar engagements are needed on what role SARS can play in tackling this national calamity, e.g. withholding tax compliance certificates for employers until pension fund contributions are paid in full as well as issuing garnishing orders to recover outstanding payments owed to pension funds.
The most powerful action to stop this theft is for workers to report pension payments theft by employers to the police. It is long overdue that such employers are charged, arrested and their assets attached. This is precisely what Cosatu will be mobilising workers to do.
Government and Organised Business have time and again stated their determination to see crime and corruption defeated. Now is the time for them to work with Cosatu and workers to deal with this cancer of crime taking place at our workplaces.
Solly Phetoe is the general secretary of Cosatu.
Solly Phetoe is the general secretary of Cosatu.
Image: Doctor Ngcobo / Independent Newspapers.
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