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The Citizen
20 hours ago
- Business
- The Citizen
Thousands denied pensions as employers fail to pay
R5.2bn in pension debt owed by employers, mainly municipalities and security firms, leaves thousands of workers in limbo. A large number of municipalities and private employers who did not pay employees' contributions over to pension funds may face investigations. Their non-payments have tipped the new two-pot retirement system into turmoil. The employers are facing imminent investigation by the department of employment and labour, which is planning to flood them with labour inspectors to check their compliance status. Long list of companies, municipalities that violated pension fund They will also be sanctioned by the Financial Sector Conduct Authority (FSCA) which has a long list of private companies and municipalities that violated the pension fund rules and the law. An FSCA report showed municipalities and firms, mainly in the security and cleaning sectors, owe their employees approximately R5.2 billion in outstanding pension fund contributions impacting 31 000 people, with some cases dating back to the 2000s. Of the outstanding contributions, some R1.4 billion is owed by municipalities, affecting pension fund members' savings. ALSO READ: Industry leaders launch market surveillance code as Steinhoff fallout lingers The FSCA identified around 7 770 noncompliant employers, with 2 330 of them being publicly listed for violating Section 13A of the Pension Funds Act. Many employees, who were hoping to claim from their pension funds under the two-pot scheme, are crying foul after hitting a brick wall when they attempted to claim the 30% due to them under the two-pot system, which came into effect last year. The system has two pots – one is for savings and constitutes one third which goes into a savings pot and is accessible for withdrawal since September last year. The other two-thirds goes into the retirement pot to be kept in the fund until the pensioner's retirement age. Employees found their monies had been withheld The distraught employees found that their monies had been withheld by employers, particularly municipalities and the security and cleaning sector, that were all blacklisted by the FSCA. This means the contributors cannot claim the saving portion of their contributions. The Congress of SA Trade Unions (Cosatu) has taken up the matter on behalf of the affected workers, who inundated their various unions with complaints about how their employers had inconvenienced and prejudiced them due to nonpayment of their pension fund contributions. ALSO READ: Missing broker, missing money Cosatu parliamentary coordinator Matthew Parks said Cosatu has established a task force with the FSCA, National Treasury and the Association for Savings and Investment South Africa (Asisa) at the National Economic Development and Labour Council to deal with this crisis. Asisa represents the collective interests of asset managers, collective investment scheme management companies, linked investment service providers, multi-managers and life insurance companies. Parks said: 'It has the potential to get out of control. We're engaging the different sectors. Engagements have taken place with the SA Local Government Association and more are planned.' Potential to get out of control The department agreed to issue a ministerial directive to labour inspectors to check pension fund compliance by employers. The department also increased the number of labour inspectors from 2 000 by 10 000 this year and 10 000 to be hired next year. The FSCA is working with the National Prosecuting Authority to pursue criminal sanctions against offenders. NOW READ: FSCA juggling high-profile cases with limited resources
The Citizen
25-05-2025
- Business
- The Citizen
Who pays the bill for growing insurance fraud? You do!
Insurers are getting stricter as insurance fraud soars, which means consumers are paying more and risk having legitimate claims dismissed. Insurance fraud is increasing sharply and South African consumers are footing the bill. Insurance fraud is becoming more frequent, more sophisticated and far more expensive. Insurance companies lose more money and consumers are paying the price. In 2023 alone, South African life insurers and investment companies detected 13 074 cases of fraud and dishonesty, a staggering 46% increase from the previous year's 8 931 cases. Losses linked to these activities jumped by 128%, increasing from R77.2 million in 2022 to R175.9 million in 2023, according to the Association for Savings and Investment South Africa (Asisa). Liezel van der Schyff, manager of the private division at GIB Insurance, says this increase is not just due to more people trying their luck. 'We are seeing a definite shift in how fraud is perpetrated. It is more organised, more deliberate and often coordinated. It is no longer just individuals inflating a claim. There are syndicates, fake brokers and even inside help in some cases.' ALSO READ: This is why and how we can stop insurance fraud Spectrum of insurance fraud is widening From seemingly harmless exaggerations to fully fabricated claims, the spectrum of insurance fraud is wide and deeply damaging. Van der Schyff says a growing trend involves customers manipulating electronic device claims, often with help from repair shops or friendly IT contacts. 'For example, clients will claim their phones or laptops are irreparably damaged, supported by a manufactured damage report, to secure a brand-new replacement. If the device is discontinued, insurers are often forced to replace it with the closest equivalent – usually a better, newer model. It has become a clever way to upgrade your gadgets without paying for it.' Other increasingly common claims include lightning or power surge damage to electronics and roof leak claims, where many are maintenance-related and excluded from insurance policies. To counter these tactics, insurers rely more heavily on technology to vet claims, including requiring proof like IMEI numbers and blacklist references for mobile phones, or deploying assessors to physically inspect damage before approving payouts. ALSO READ: Life insurance fraud: Here's how innocent consumers are 'tricked' into becoming complicit Ripple effect of insurance fraud Van der Schyff says fraudulent claims like these also have a ripple effect on the entire pool of policyholders, where insurers are forced to increase premiums across categories that are considered high risk, including jewellery, electronics and portable tech. 'It is frustrating because the majority of policyholders are honest, but they are penalised for the dishonesty of a few.' Insurers are tackling these challenges by increasingly implementing fraud prevention strategies that leverage technology such as predictive analytics and AI-powered systems that flag inconsistencies across multiple data points, making it harder for fraudulent claims to slip through. Van der Schyff says insurers are also working together towards the common goal of stamping out fraud by sharing data to identify repeat offenders and syndicate activity, while internal forensic departments conduct investigations, sometimes even scanning social media to verify the details of a claim. 'If fraud is detected, the consequences are serious. The policy would be cancelled and the client is flagged across insurance industry records. If they try to take out a new policy elsewhere, they are legally required to disclose this history and many insurers will decline to cover them.' ALSO READ: Me, commit insurance fraud? Never! What can you do about insurance fraud as a policy holder? Van der Schyff says for consumers who try to stay on the right side of the claims process, the rules are simple: be honest, submit accurate information and notify your insurer of any material changes to your risk profile. 'Omitting details, like a new address, any changes in how a vehicle is used or new drivers, can lead to your claim being denied, or the policyholder even being accused of fraud.' She says consumers should also be wary of scams disguised as insurance communication. Fraudsters often use phishing emails and texts to trick people into clicking on malicious links or disclosing sensitive information. Poor grammar, strange formatting and a sense of urgency are often tell-tale signs of a scam. 'The reality is insurance fraud does not just harm companies but affects every single policyholder. We all end up paying the price, either in higher premiums or reduced cover. That is why early detection, data sharing and client awareness are so critical to keeping the system fair and sustainable.'
