SA's looming retirement crisis as R5.2bn funding gap emerges

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This could push retirees into poverty and disrupt the retirement system if the issue persists, Unathi Kamlana, commissioner at the Financial Sector Conduct Authority, warned.

“As pension funds rely on steady contributions to maintain liquidity and fulfill their obligations, they may become strained when contributions are inconsistent or delayed,” Kamlana said. “This in turn could limit their ability to invest in long-term projects, diminishing their role as major institutional investors in the economy,” making the entire retirement system more vulnerable, he said.

Employees recently discovered the non-payment of pension contributions, especially by municipalities, when they tried to withdraw funds under the new two-pot system introduced on 1 September 2024.

The regulator is counting on the Conduct of Financial Institutions Bill to address the issue. This legislation will place employers responsible for retirement contributions under its oversight, enhancing compliance and accountability, Kamlana explained.

It is also considering stricter penalties for fund managers and administrators who fail to act against employers with pension-contribution arrears, he added.

The Financial Sector Conduct Authority (FSCA) has publicly named some of the offenders.