When employers can and cannot touch pension savings

AN EX-EMPLOYEE recently learnt the hard way that, by defrauding her for- mer employer, she may not only have to face charges but could also lose all the contributions made into her pension fund — including the portion that would have formed part of her cost-to-company earnings.

- NICOLA MAWSON

A recent decision by the Pen- sion Funds Adjudicator, Muvhango Lukhaimane, dealt with this sort of issue, with an added wrinkle: the fund can't willy-nilly withhold the pension payout.

Lukhaimane recently ordered that a provident fund that withheld pay- ment of a withdrawal benefit on the basis that the member had allegedly defrauded her former employer had to allow her to place her version of events before it.

The employee, as a member of the fund, had filed a complaint with the adjudicator, arguing that the fund had withheld her savings without her being able to state her case. Lukhaimane ordered the fund to first consider the complainant's representations and then decide whether it should con- tinue to withhold the benefit.

When the employee left the com- pany, which resulted in her exiting the fund, “a withdrawal benefit became due and payable to the complainant,” the adjudicator’s decision reads.

The complainant said that she resigned in April 2024 after 15 years. Her former employer said it had with- held payment of her withdrawal ben- efit of RS38 771 on the grounds that she had committed fraud at her place of employment.

The fund, in turn, stated that it had established that a summons had been issued against the former employee for alleged fraud and that the South African Police Service was also inves- tigating alleged theft.

It was, therefore, legally within its rights in terms of the Pension Funds Act to withhold the money.