NEWSFLASH Retirement Fund contributions and the COVID-19 virus
The impact of the COVID -19 virus and the state of disaster declared by the President to combat the effects thereof will be felt by all employers and employees in the weeks and months to come.
Section 13A of the Pension Funds Act compels employers to pay the retirement fund contributions deducted from an employee’s salary as well as the employer’s contribution to the retirement fund in question within seven (7) days of the end of the month for which such contributions are being deducted. A failure to comply renders the directors of the company personally liable for the payment of such amounts. In addition it constitutes a criminal offence with severe penalties.
The financial impact of the disaster regulations will make it increasingly difficult for some employers to meet their obligations in terms of this Section.
The Financial Sector Conduct Authority (FSCA) has recognised this problem and has now issued a communication calling the boards of various retirement funds’ attention to the problem. The notice states that many funds have rules dealing with the problem and the boards of the funds need to apply such rules to alleviate the challenges that employers and employees will be facing. In the event that funds do not have rules providing for financially distressed employers and / or employees, the funds are requested to submit such rule amendments urgently. The communication on financially distressed employers and employees and the requirements of Section 13A requiring submission for urgent rule amendments is available to download on the FSCA’s website.
We urge our clients to contact their retirement fund administrators or brokers urgently to determine whether their fund rules make provision for financially distressed situations and, if not, to enquire as to whether such rules will be introduced.
Please note that the FSCA urges employers to continue with the payment of risk benefits, such as group life and group disability benefits.
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