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The Citizen
4 days ago
- Business
- The Citizen
Limpopo DA lays charges over GNT pension crisis
LIMPOPO – On Monday, May 26, the Democratic Alliance (DA) in Limpopo laid criminal charges against the CEO of Great North Transport (GNT) and the Limpopo Economic Development Agency (LEDA), the sole shareholder of GNT. The charges, filed at the Polokwane Police Station, relate to the non-payment of employee pension fund and medical aid contributions. Jacques Smalle, DA Limpopo provincial spokesperson for economic development, environment, and tourism, said LEDA, as the sole shareholder, holds both statutory and fiduciary responsibilities for GNT's financial management. 'The scale of the crisis became clear during an urgent sitting of the Limpopo Portfolio Committee on Economic Development, Environment and Tourism on Friday, May 23,' Smalle explained. 'This meeting, which followed the DA's repeated calls for GNT and LEDA to account, revealed unpaid contributions to three pension schemes totalling R6.78 million and affecting 945 employees. In some cases, employee memberships have already been suspended. If at least R1 million is not paid by the end of May, all memberships could be suspended, potentially resulting in permanent loss of pension benefits.' Smalle attributed the crisis to 'years of corruption, mismanagement, and lack of accountability' at GNT. He added that the company's failure to implement a viable turnaround strategy further deepened its financial troubles. 'The situation at GNT is dire; it has become an unsustainable entity,' Smalle said. 'The charges laid include theft, fraud, and violations of both the Pension Funds Act and the Medical Schemes Act, all of which are criminal offences.' In response to the allegations, Mthunzi Dlamini from LEDA acknowledged the outstanding contributions and said efforts were underway to settle the payments within the week. 'GNT has faced ongoing financial constraints in meeting its obligations,' Dlamini said. 'However, strategic steps have recently been taken, including the procurement of new buses to replace the ageing fleet and the launch of a bus lease programme aimed at increasing operational capacity.' LEDA CEO Thakhani Makhuvha said the LEDA is committed to resolving the issue. 'As the shareholder, LEDA has decided to step in and ensure that all outstanding pension and medical contributions are brought up to date,' Makhuvha said. 'We recognise the severity of the situation and apologise to affected employees. This is deeply regrettable.' At Caxton, we employ humans to generate daily fresh news, not AI intervention. Happy reading!
The Citizen
02-06-2025
- Business
- The Citizen
DA Limpopo lays charges over GNT pension and medical fund scandal
POLOKWANE – DA provincial spokesperson for Economic Development, Environment and Tourism, Jacques Smalle presented himself at the Polokwane Police Station on Monday morning to lay a criminal complaint against the board and executive management of Great North Transport (GNT) for the non-payment of employee pension fund and medical aid contributions. According to Smalle, the board and executive management of the Limpopo Economic Development Agency (Leda) will also be enjoined in this complaint. You might also want to read: Plans underway to resolve GNT pension fund debacle 'As the sole shareholder of GNT, Leda bears statutory and fiduciary oversight responsibilities for GNT's operations and financial conduct. They too must be held accountable and face consequence management,' Smalle explained. According to Smalle, the shocking extent of this crisis was laid bare during an urgent meeting of Limpopo's Portfolio Committee on Economic Development, Environment and Tourism, convened last Friday evening, following the DA's sustained calls for GNT and Leda to appear before the committee to explain and account. It became apparent at the meeting that unpaid contributions to three pension schemes now total R6.78m, affecting 945 employees. In some cases, employee membership has already been suspended. If a partial payment of R1m is not made by the end of May, all employee memberships will be suspended. If the default continues, employees' risk permanently losing their pension benefits. Regarding medical aid contributions, total unpaid premiums amount to R3.21m, affecting 247 employees. You might also want to read: Unpaid provident fund sparks protest by Great North Transport employees All medical aid coverage for GNT employees has been suspended, meaning employees cannot access healthcare services unless they pay out of pocket. 'While undertakings were made at the portfolio committee, and while MEC Tshitereke Matibe indicated that he wished to address the crisis privately and in confidence to the committee, this never materialised. A subsequent statement issued by MEC Matibe, in which he apologised to GNT employees and set out certain actions including placing GNT under administration, was later withdrawn. It is within this context that our criminal complaint to SAPS will be lodged,' Smalle explained. 'We urgently need resolution to the plight facing GNT's employees, and we need to see real accountability and consequence management. If we don't clean out GNT, no turnaround will succeed,' Smalle reckoned. 'In our complaint to the police we call on law enforcement to investigate the conduct of GNT and Leda officials and their board members for theft, fraud, contraventions of the Pension Funds Act and contraventions of the Medical Schemes Act, all of which constitute criminal offences,' Smalle concluded. At Caxton, we employ humans to generate daily fresh news, not AI intervention. Happy reading!
The Citizen
01-06-2025
- Business
- The Citizen
What happens to your pension fund when you pass away?
Regardless of what you stipulate in your will, your pension fund money will be distributed according to the kind of fund and its rules. You have contributed to your pension fund all your life, but do you ever think about what will happen to your pension or the rest of it if you are already retired when you pass away? When a loved one passes away, finances are the last thing families should have to worry about, Siphamandla Buthelezi, head of platforms at advisory firm NMG Benefits, says. 'Yet, time and again, grief is compounded by confusion and conflict over pension fund payouts. 'The truth is, ensuring what happens to your pension fund after you die is not as simple as naming a beneficiary or drafting a will. Legislation, cultural nuances and the issue of 'dependency' all play a role in who ultimately receives what.' He says the type of pension or group life fund you belong to, whether approved or unapproved, directly affects how your death benefits are distributed. 'In the case of unapproved pension or group life funds, these are not governed by Section 37C of the Pension Funds Act, meaning the employer or the terms of the policy determine who receives the benefit. ALSO READ: This is what a divorce will do to your pension fund Pension fund paid out to those you chose as beneficiaries 'To ensure fairness, employers typically follow the most recent beneficiary nomination form you completed. However, if you did not update your beneficiary nominations, there is a risk that the benefit may go to people you no longer intended to support after your death.' For this reason, Buthelezi says it is especially important with unapproved funds to regularly update beneficiary nominations to ensure your wishes are accurately reflected and honoured. He points out that the rules are different in the case of approved pension funds. 'Death benefits are distributed in accordance with Section 37C of the Pension Funds Act. 'This means the fund's trustees are legally obligated to investigate and identify the deceased member's dependents and/or nominated beneficiaries and must then allocate the benefit based on financial dependency and other relevant legal considerations. 'The final decision rests with the trustees, not necessarily with the nominations you made. In these cases, trustees of the funds are legally obliged to prioritise financial dependents over nominated beneficiaries. 'When a member of the approved pension fund passes away, the trustees begin an investigation into who financially depended on the deceased and to what extent. 'These investigations often include a deep dive into the deceased's financial records, looking for recurring payments such as rent, school fees, or allowances.' ALSO READ: South Africa's real retirement age? 80! Pension fund paid out to people who depend on you financially Buthelezi points out that this means that even if you have named beneficiaries in your pension fund policy, they may receive nothing if they were not financially dependent on you. Conversely, someone you never intended to benefit, such as a former partner or someone you are having an affair with, could end up receiving a significant portion of your pension savings. 'It is a hard truth, but financial dependency trumps relationship in the eyes of Section 37C of the Pension Funds Act.' He says financial dependency extends to children born out of wedlock or any other individuals who can prove financial dependency on the deceased. In some instances, a wife may even find herself financially responsible for children she never knew existed, especially if she and her husband were married in community of property and he supported these children during his lifetime. 'Having a will is important, but it will not override Section 37C pension fund rules. Your will governs your estate, meaning your assets, investments and personal belongings, but pension funds do not consult your will after you have passed away.' ALSO READ: Warning! The retirement savings gap is widening in South Africa Remember this The takeaway? 'Update your beneficiary nominations regularly and talk to your family about your relationships and commitments. 'We see all too often how spouses only find out how their partners lived and who they supported after the partner has passed. 'But by then it is too late to influence their decisions or safeguard your financial wellbeing.'
IOL News
31-05-2025
- General
- IOL News
Understanding the allocation of death benefits in South African retirement funds
Explore the complexities of death benefit allocation from retirement funds in South Africa, and understand the legal obligations of trustees and the rights of dependants. Image: Independent Newspapers. It is a sad event when a loved one, especially a parent, passes away. Dealing with grief, family members, funeral arrangements, insurance companies, and the retirement fund of your deceased parent can increase the anxiety levels of adult children who must take control of a situation that most of us cannot fully prepare for. Emotions are high, and we try to control everything. One thing we cannot control is the allocation and payment of the death benefits by the retirement fund of our deceased parents. In terms of section 37C of the Pension Funds Act, the trustees of a retirement fund have the obligation and discretion, to: Find the dependants and nominees of the deceased member; Allocate death benefits to qualifying dependants and nominees in a just and equitable manner; and Pay the allocated benefits to the qualifying dependants and nominees. Section 1 of the Pension Funds Act defines a dependent, about a fund member as: The spouse of the member. The child of the member. A person in respect of whom the member is legally liable for maintenance, for example, an ex-spouse who is legally entitled to maintenance in terms of a divorce order. A person in respect of whom the member is not legally liable for maintenance if such a person was, in the opinion of the fund trustees, factually dependent on the deceased for maintenance, for example, a stepchild. A person regarding whom the member would have become legally liable for maintenance had the member not died. The Supreme Court of Appeal stated in the Guarnieri ruling that the purpose of section 37C of the Pension Funds Act is to protect existing and potential dependants and that it serves a social function to protect dependency, even over the clear wishes of the member. When allocating death benefits, the Office of the Pension Funds Adjudicator has identified the following factors that fund trustees must consider when making just and equitable death benefits allocations: The age of the dependants. Minors and dependants who are retired must receive greater consideration than adult dependants who can earn an income to support themselves. The relationship with the deceased. The spouse and children of the deceased should rank above the parents and siblings of the deceased member. The extent of the dependency. A minor child who was 100% dependant on the deceased for maintenance is treated differently from an adult child who earns an income and is only partially dependent on his or her parent for maintenance. The wishes of the deceased. The persons nominated by the member in a nomination form or a will must be considered for an allocation of benefits if the needs of dependants have been met. The financial affairs of the dependants, including their future earning potential. An adult child of the member has a higher future earning potential than the spouse of the member, who is no longer able to work, and the spouse should thus receive more consideration than the adult child. The amount available for distribution. The death benefit must first be applied to ensure that the future needs of dependants are catered for. If there are surplus funds, the nominees of the deceased who are not dependants, can be taken into account for a benefit allocation. Nominees who are not dependants can therefore be excluded from receiving benefits where the death benefit is small. In the case of Dlamini v South African Local Authorities Pension Fund and Others, the Financial Services Tribunal had to determine if the Pension Funds Adjudicator's decision that the death benefit allocation decision of the fund was just and equitable must be upheld. The eldest daughter of the deceased member complained that the decision by the fund trustees to allocate 45% of the death benefit payable by the fund upon the death of her father to his life partner was not just and equitable. The complainant claimed that the decision of the trustees was based on false documentation, that the dependency of the life partner was overexaggerated, and that the fund contradicted itself in the submissions submitted to the Tribunal. The Tribunal ruled that the onus was on the complainant to prove that the decision of the trustees was not just and equitable. It found that the life partner of the deceased member submitted an affidavit of dependency and that she and the deceased member lived together for a period of two years at the time of his death. The complainant failed to provide any evidence that proved that the deceased member and the life partner were not in a relationship, did not share household expenses, and never resided in the same house.
The Citizen
05-05-2025
- Business
- The Citizen
Financial distress no excuse for not paying over pension fund contributions
The court judgment sends a clear message to companies and their directors that they cannot use pension fund contributions for anything else. A company's financial distress is not an excuse not to pay over employees' pension fund contributions and directors are personally liable for unpaid pension contributions deducted from employees' salaries, according to a judgment of the Western Cape High Court. The Engineering Industries Pension Fund took a company, Installair, to court to recover outstanding pension and provident fund contributions from May to July 2020 and hold the company's directors personally liable for the unpaid contributions. According to Nicolette van Vuuren, partner and Tshepiso Tshshonga, trainee attorney at Webber Wentzel, the fund relied on these provisions of the Pension Funds Act: section 13A(1), which mandates employers pay employee and employer contributions to the retirement fund in full and on time section 13A(7), which provides for the personal liability of individuals responsible for ensuring the employer's compliance with its obligations section 13A(8), which imposes personal liability on directors who are regularly involved in the management of the employer's financial affairs and section 13A(9), which requires retirement funds to notify employers in writing of individuals who may be held personally liable, read with Regulation 33, promulgated under the Pension Funds Act but which was since repealed. The aim of the Pension Funds Act is to protect the retirement savings and financial security of members by ensuring that contributions are properly deducted, managed and paid over to the pension fund. ALSO READ: Councils take pension billions Pension fund went after directors as company was in liquidation Installair was in liquidation and therefore the fund did not ask for any relief against the company, but instead against the company's directors. Van Vuuren and Tshshonga say the directors acknowledged that the company deducted pension and provident fund contributions from employees' salaries but failed to pay them over to the fund. The directors used the deducted amounts to subsidise employee salaries due to the company's financial distress and the directors argued that the failure to pay was due to circumstances beyond their control. They contended that they did not act recklessly or negligently. Van Vuuren and Tshshonga say one of the directors also claimed that section 13A(8) of the Pension Fund Act should not apply to her, as she was not involved in the financial affairs of the company. The directors also argued that liability under section 13(8) arises only where directors are unable to meet statutory obligations due to circumstances within their control and where there has been reckless or negligent conduct, which they denied. ALSO READ: Pension fund contribution arrears 'serious crime against humanity' Court finds directors clearly failed to meet their statutory obligations However, the High Court found that the directors were actively involved in managing the company's financial affairs and clearly failed to meet their statutory obligations under the Pension Fund Act. The court described the directors' defences as 'far-fetched' and 'untenable' and rejected them summarily. The court accordingly held the directors personally liable for the unpaid contributions, ordering them to pay the outstanding amounts, together with accrued interest. In addition, the court dismissed the argument that the Covid-19 pandemic justified the company's failure to pay over contributions. Van Vuuren and Tshshonga note that the period in question (January to March 2020) preceded the national lockdown, which was only imposed on 26 March 2020. They say that as the company was fully operational during this time, the pandemic could not be used as an excuse for non-compliance. ALSO READ: Only two employers convicted since 2019 for not paying their workers' pension fund contributions Directors had no viable defence and must pay up themselves With no valid defence presented, the court held the directors liable for the outstanding pension fund contributions. The court also emphasised that a failure to issue an order in favour of vulnerable groups would constitute a dereliction of its constitutional duty. In addition, the court noted that the increase in withdrawal claims under the two-pot retirement system highlighted persistent non-compliance with pension contribution obligations, a trend that threatens the financial security of retirees. Van Vuuren and Tshshonga say this case serves as a strong reminder that enforcement of pension fund compliance is not only a legal obligation but a moral imperative to protect employee's long-term financial interests. 'We urge employers and particularly retirement funds to implement robust financial controls and regularly review compliance policies to ensure that all pension contributions are paid promptly and accurately, in accordance with the Pension Fund Act and the rules of the relevant fund. 'This will go a long way to shield directors and companies from severe legal penalties and reputational harm. Even in the face of financial difficulty, diverting retirement fund contributions for other uses is strictly prohibited. Directors cannot rely on financial distress as a defence to escape personal liability for unpaid contributions.' ALSO READ: Two-pot retirement system: Nothing for thousands of pension fund members Case underscores there is no way out of paying over pension contributions This case underscores a crucial legal principle that employers cannot avoid their pension obligations through delay tactics or legal posturing, Van Vuuren and Tshshonga say. 'The courts have made it clear that accountability in fulfilling statutory duties is non-negotiable. Companies that ignore these obligations do so at their peril. 'In today's challenging economic climate, many companies face financial distress and even insolvency. However, recent legal developments make it clear that financial hardship is no excuse for failing to meet statutory obligations, particularly the obligation to pay over retirement fund contributions deducted from employees' salaries.' NOW READ: FSCA lists 2 330 employers with pension fund contributions in arrears
