The Congress of South African Trade Unions (Cosatu) expresses serious concern over the growing number of instances where employers fail to meet their obligations for pension fund contributions, resulting in staggering arrears of R8.33 billion owed to 590,000 workers. This developing issue threatens the financial stability of workers and their families in South Africa.
According to the latest data provided by the Financial Sector Conduct Authority (FSCA), 16,566 employers have outstanding debts to 75 pension funds amounting to approximately R8.33 billion, affecting 590,000 people. This represents a threefold increase in involved employers since 2023 and a 14% rise in unpaid amounts since 2025.
Cases of misappropriation of workers' earnings are most frequently observed in the security, cleaning, and transport sectors, as well as in local government. In some cases, this may indicate financial difficulties of struggling companies, including some bankrupt municipalities. Regardless of the reason, this is a criminal offense, as employers commit fraud by stating on payslips that funds have been transferred to pension funds when they have not.
It is estimated that less than 10% of South Africans can save enough for a comfortable retirement. The mass theft of workers' pension funds by certain employers exacerbates the existing savings crisis. This negatively affects not only the workers themselves but also their numerous dependents, which is complicated by a high unemployment rate of 43.7%.
In most cases, employers violate not only pension contribution obligations but also other payments to third parties, such as medical insurance, disability and life insurance, unemployment and occupational disease insurance, and income tax payments. Workers suffer losses when their medical or insurance policies lapse, or when taxes are not paid.
The FSCA has played a crucial role in highlighting this national crisis, and a decisive set of measures is now required to eliminate this 'ticking time bomb'. Cosatu raised this issue at the Nedlac meeting and received mixed reports from the Association of Local Municipalities of South Africa, as well as from Security and Transport Union Councils, which, according to Cosatu, ignored widespread theft by their members.
As a result of negotiations at Nedlac, Cosatu achieved a progressive agreement with the Department of Employment and Labour, which will allow labour inspectors to check compliance with pension fund requirements during workplace inspections starting in 2026. One of the significant steps in protecting workers' rights, initiated by ANC-led administrations, was the substantial increase in the number of labour inspectors from 1,200 in 2020 to 2,000 to date. Furthermore, under the Presidential Employment Stimulus, 20,000 contract labour inspectors are being hired.
In the 2026 State of the Nation Address, President Cyril Ramaphosa announced plans to hire another 10,000 permanent labour inspectors over the next three years, bringing the total number of permanent inspectors to 12,000 supported by 20,000 contract inspectors. An increase in workplace inspections is already being observed due to these investments.
Since many unscrupulous employers are in sectors with union councils, such as security, cleaning, and local government, it is critical that these councils ensure compliance with collective agreements and pension legislation. Employers who fail to meet their legal obligations must be removed from the Companies and Intellectual Property Commission register, and in the security sector—the Private Security Industry Regulatory Authority. The Ministry of Finance must prohibit them from doing business with the state at all levels, including national, provincial, and local.
Although Cosatu is concerned about the Ministry of Finance withholding 'Fair Share' payments for 69 municipalities, it hopes this will help local government get its affairs in order and pay municipal workers' pension funds and settle debts on time.
Cosatu intends to publish lists of unscrupulous employers mentioned in public FSCA reports so that workers know who is misappropriating their pension funds. Union representatives will demand that these employers make payments at their workplaces. Discussions are also needed on how to strengthen the FSCA's powers to take action against unscrupulous employers, and what role SARS can play, for example, by suspending personal income tax compliance certificates until pension contributions are fully paid, as well as issuing debt collection warrants.
The most effective way to stop this theft is for workers to report the theft of pension contributions by employers to the police. Cosatu will mobilize workers to ensure that such employers are held accountable, arrested, and their assets seized.
The Financial Sector Conduct Authority (FSCA) has published lists of 6064 employers who violated Section 13A of the Pension Funds Act by failing to remit pension benefits to their employees' respective funds.
The FSCA stated that 6064 employers made non-payments into pension funds on behalf of their workers, accumulating a total debt of R8.33 billion. Previous reports indicated a large number of companies withholding pension deductions from employee salaries but not transferring these funds to pension funds, leading to billions of rand accumulating as overdue contributions.
The FSCA noted that current data shows an increase in the severity of the debt: the percentage on late payments increased by 21.5%, while the growth in the capital of overdue debt was 9%. This indicates that unpaid contributions remain outstanding for longer periods, continuing to accrue interest.
This announcement is the fifth in a series of publications initiated in June 2022, aimed at increasing transparency, alerting affected participants and stakeholders, and prompting employers and pension funds to address outstanding contributions promptly.
The number of employers reported for non-compliance in previous periods has more than tripled: from 23 funds and 5430 employers in April 2023 to 75 funds and 16556 employers as of February 28, 2026. Among these were the names of 6064 employers who made non-payments, based on the severity and duration of the debt.
The total debt amount of approximately R8.33 billion affects about 590,000 pension fund members. The FSCA reported that this represents an increase of R1.04 billion or 14.2% compared to the amount of R7.29 billion registered on March 31, 2025. Furthermore, the percentage on late payments now stands at 43.5% of the total debt amount.
Entities participating in local government funds account for 21.5% of the total debt, whereas those participating in bargaining council funds contribute 76.9%. The most significant debts among municipalities in the North West and Free State provinces collectively constitute 79.4% of all municipal debts.
Since the FSCA's first publication on unscrupulous employers, the total amount recovered has reached R1.01 billion, which is approximately 12.1% of the estimated debt. More than 200 employer records have improved their compliance status since the previous publication in September 2025. This includes full or partial repayment of the debt, repayment agreements, or voluntary business closure.
In the local government sector, intervention by the National Treasury to withhold fair share allocations from persistently non-compliant municipalities has begun to improve payment regularity. The FSCA emphasized the importance of continuous interdepartmental cooperation to resolve issues with overdue contributions and protect pension fund members.
The FSCA announced its intention to continue joint efforts with key stakeholders, including the Auditor-General, the National Treasury, the National Prosecuting Authority, and the Directorate for Priority Crime Investigation, to strengthen oversight and ensure accountability of employers and their directors for non-compliance.
Failure to pay these benefits into a pension fund is a criminal offense punishable by a fine of up to R10 million, imprisonment for up to 10 years, or both, with directors and senior management potentially bearing personal liability.
The Financial Sector Conduct Authority (FSCA) previously labeled the retail automotive sector as the 'worst offender', noting a 50% increase in non-compliant employers in the Auto Workers Provident Fund and Motor Industry Provident Fund, affecting the accounts of over 9000 employees. According to the FSCA, there are also approximately R88 billion in unclaimed financial assets in South Africa, with the automotive industry holding a significant share.
According to the Secretary General of the Motor Industry Bargaining Council (MIBCO), Paulos Masemola, thousands of workers are unaware of the money owed to them through pension funds, severance pay, overdue wages, death and sickness benefits, and 'hidden' benefits such as extra vacation pay. These funds often remain untouched because workers change jobs, phone numbers, or they are simply not informed about the existence of this money. Nevertheless, the money remains their property and can be claimed at any time.
South African trade unions have raised the alarm over a crisis involving R8.3 billion in unpaid pension contributions, affecting 590,000 workers. The issue stems from an increasing number of companies failing to transfer contributions to pension funds, leaving workers in a precarious financial position during their later years.
The Public Service Association (PSA) discovered that employers have failed to remit over R8 billion into pension funds, despite these amounts having been deducted from employees' salaries. The unions emphasized that workers have very limited recourse when they find out that a company is not making pension fund transfers.
Economists view this situation as a serious problem that could negatively impact workers' lives after retirement, as many already struggle to afford a comfortable retirement even with a full pension. In a statement, the PSA expressed shock and outrage regarding reports that thousands of employers across South Africa are failing to meet their pension contribution obligations, accumulating outstanding sums amounting to an alarming R8.3 billion.
The PSA characterizes this as 'a gross betrayal of worker trust and a direct attack on the financial security and dignity of employees,' who expected the salary deductions to be transferred to the relevant pension funds. Instead, many workers face uncertainty about their retirement savings due to illegal and unethical actions by employers.
The union stated that this situation is a 'national disgrace,' as pension contributions are not optional payments but deferred earnings belonging to the employees. Any employer who deducts these contributions but fails to remit them is effectively depriving workers of their earned pension savings. The PSA is extremely concerned that employees only learn about these unpaid contributions after being dismissed, retiring, or applying for benefits, at which point the financial damage can be substantial.
The PSA believes that such behavior undermines confidence in South Africa's pension system and puts countless families at risk of financial hardship. The union calls upon President Cyril Ramaphosa and the government to take decisive and immediate action against employers who fail to comply with their legal obligations.
The PSA insists on imposing severe financial penalties on employers who do not pay pension contributions, and criminal prosecution for those who illegally withhold or embezzle employee pension contributions. Increased oversight and regular compliance audits by relevant regulatory bodies are also required, along with the publication of names of unscrupulous employers to enhance transparency and accountability, as well as urgent measures to ensure the return of all unpaid pension contributions, including applicable interest, to the accounts of affected employees without delay.
The union added that workers should not be held responsible for the non-compliance and abuse of trust by employers. The PSA will continue to advocate for stronger protection of workers' pension benefits and support any efforts to ensure full accountability for employers who violate their legal duties, as pension savings represent the future well-being of millions of South Africans.
Edwin Mkhize from Cosatu in KwaZulu-Natal highlighted the seriousness of the issue and the limited options available to workers. He stressed that the legal process, including filing criminal charges against a company, could take a very long time, labeling it an issue of corruption, noting that such actions are committed not only by small but also by large companies and municipalities.
He suggested that part of the solution being explored by Cosatu is ensuring worker representation on the boards of trustees of these pension funds so that the problem can be detected before it becomes widespread. Mkhize added that Cosatu has already worked to draw the attention of authorities to non-compliant companies.
Economist Douwe Rudd characterized the situation as a serious problem. He noted that people often underestimate pension contributions, relying on the honesty of their employers and failing to check payments. His advice was for people to monitor the remittance of funds, as a lack of money in retirement creates serious difficulties, especially considering that most South Africans cannot live independently in retirement, with state-owned enterprises and, specifically, municipalities being among the main culprits.
