The Congress of South African Trade Unions (COSATU) is deeply angered that despite efforts to raise awareness of the perils of not transferring workers’ pension fund contributions to the relevant funds, the number of defaulting employers continues to escalate. The latest Financial Sector Conduct Authority (FSCA) report indicates that the number of defaulting employers rose to 16 556 by end of February from the 15 521 previously reported in September 2025.
Total arrears have increased by R1.04 billion to R8.33 billion, putting the financial futures of about 590 000 workers at risk. Worryingly, late payment interest now accounts for 43.5% of total arrears, meaning outstanding contributions remain unpaid for longer periods, accumulating interest as a result.
Despite recoveries reaching R1.01 billion since the FSCA’s first report in June 2022, total arrears are still far too high and risk plunging more than half a million workers into poverty retirement. More than an injustice, this is a crime against workers whose sweat of the brow is being toyed with by these unscrupulous employers.
Appallingly, counted among the unscrupulous employers are municipalities, who deducted R1.7 billion from municipal workers’ salaries as at end of February 2026, but never transferred the monies to pension funds. Minister of Finance, Enoch Godongwana, said this was one of the main reasons National Treasury withheld funding to 69 municipalities.
Immediate payment of pension fund contributions and other third-party payments was among the foremost demands listed in the memorandum members of COSATU affiliate, South African Municipal Workers Union (SAMWU), delivered to National Treasury offices in Pretoria last Thursday.
Municipal workers have borne the brunt of maladministration and are often not even paid their salary for months on end, in addition to contending with arrear pension fund contributions.
When pension fund contributions are in arrears, workers’ death and disability benefits become void with devastating consequences for the workers and their families, particularly those who work under dangerous conditions. Moreover, withholding contributions robs workers of the compounding effect of interest that would ultimately ensure they are not poverty-stricken when they are old and can no longer work.
Defaulting employers are in contravention of Section 13A of the Pension Funds Act, which stipulates employers must pay over pension fund contributions in full to the fund within seven days after the end of the month. Those not complying are breaking the law and if prosecuted, will be liable for a fine and can even be jailed. They are thieves, plain and simple.
COSATU appreciates tentative progress reported by the FSCA on contribution payments following National Treasury’s withholding of equitable share allocations to municipalities prior to this latest round. In addition, starting in January this year, labour inspectors have been authorised to enforce compliance regarding payment of pension fund contributions.
This crisis will, however, not end until delinquent employers are charged and prosecuted for the theft, fraud and corruption that this mass looting is. COSATU will engage unions of affected workers to begin laying charges with the police.
The Federation and its affiliates will intensify measures to report defaulting employers to ensure that all outstanding contributions, including interest are paid.
Issued by COSATU