The Economic Freedom Fighters (EFF) have taken decisive action, urging the Speaker of the National Assembly, Thoko Didiza, to establish an Ad Hoc committee to investigate the alleged theft of workers’ pension funds in South Africa. This comes in the wake of reports suggesting that certain companies, particularly within the private security sector, and several municipalities, have not been paying workers’ pension and provident fund contributions, leading to a shortfall that could affect thousands of employees.
The Pension Fund Crisis Unfolds
According to a recent report from the Financial Sector Conduct Authority (FSCA), over 3,000 private security companies and municipalities have unlawfully withheld pension contributions for extended periods — some for as long as 240 months. This failure to comply with pension obligations is not only illegal but has left countless workers without access to the money they rightfully deserve.
This issue has gained prominence with the implementation of the “two-pot system” under the Revenue Laws Amendment Bill of 2023. This new system, which became effective on September 1, allows workers to access portions of their retirement savings without needing to resign or cash out their entire pension funds. However, for many workers, this opportunity is being jeopardised because the pension funds simply aren’t there — withheld by companies and municipalities that have failed to make the required payments.
EFF Calls for Urgent Action
EFF MP Sinawo Thambo voiced the party’s concern over the situation, emphasizing the urgency of the matter. He pointed out that the two-pot system was meant to offer financial relief to workers, but for those whose employers have withheld pension payments, this system is currently ineffective.
“If these reports are true, millions of employees may face significant challenges withdrawing portions of their pensions using the two-pot system,” Thambo said. He further warned that this situation could potentially become a national crisis if it remains unresolved.
The EFF’s letter to Speaker Thoko Didiza stresses the need for an immediate investigation. The party argues that companies and municipalities have been making statutory deductions from workers’ salaries without forwarding the contributions to the appropriate funds. The EFF has identified 2,224 private security companies and 172 municipalities as major offenders in this regard.
A Call for Accountability
The EFF’s proposal for an Ad Hoc committee aims to ensure accountability and transparency, particularly in cases where government entities may be complicit in the mismanagement of pension funds. The party specifically raised concerns about municipalities, government departments, and state-owned enterprises that may have contracted private security companies in violation of the Pension Funds Act.
It has been reported that these entities collectively owe workers between R1 billion and R6 billion in pension and provident fund payments. The party’s stance is that this injustice, which affects thousands of hardworking employees, cannot go unaddressed.
Previous Cases of Pension Mismanagement
This is not the first time such a case has emerged. Earlier this year, ActionSA exposed the Great North Transport bus company, owned by the Limpopo Provincial Government, for failing to pay over R300 million to more than 800 current and former employees. These workers were left without their deserved pensions, leading ActionSA to approach the Hawks Special Investigation Unit to launch a probe into the company’s financial misconduct.
Conclusion
The EFF’s call for an investigation into the pension fund scandal reflects the broader concerns surrounding financial mismanagement in South Africa. As the two-pot system takes effect, the party is pushing for swift action to ensure that workers’ rights to their retirement savings are upheld. With billions of Rands at stake, the establishment of an Ad Hoc committee could be the first step toward resolving this alarming issue.