- Paulos Masemola says employers carry the financial and legal risk when retirement contributions are unpaid.
- Workers can lose death and disability cover once contributions fall into arrears.
- MIBCO has urged employers to prioritise retirement fund payments with the same urgency as wages.
Motor Industry Bargaining Council (MIBCO) General Secretary Paulos Masemola has warned industry employers that failing to pay retirement fund contributions on time could leave workers and their families financially exposed during times of death or disability.
Masemola’s warning follows a recent Financial Services Tribunal ruling involving a participating employer in the Motor Industry Retirement Funds system that failed to pay retirement contributions timeously.
The tribunal found that where employers do not pay retirement fund contributions, the employer becomes liable for risk benefits that would normally be covered through the retirement fund system.
Masemola said the ruling made the position clear for employers across the industry. He said, “This judgment makes it unequivocally clear that employers carry the financial and legal risk when contributions are not paid over as required.”
Masemola added that the issue extends beyond administrative compliance and directly affects workers and their families. “It is not only a compliance issue, but it also directly affects the financial protection of employees and their families,” he said.
Workers lose critical protection
According to the ruling, insurance protection linked to the retirement fund stops once contributions fall into arrears. Under normal circumstances, workers covered by the Motor Industry Retirement Funds receive their accumulated fund credit together with additional death and ill health disability cover equal to three times their pensionable remuneration.
However, when contributions are not paid, that additional risk benefit falls away entirely. This means employees or their beneficiaries may receive only accumulated savings in the fund if death or disability occurs while contributions remain unpaid.
Masemola said the retirement fund system exists to protect workers and their dependents during times of crisis. He said, “The purpose of the retirement fund system is to ensure that employees and their dependents are protected in times of death or ill health.”
Masemola warned that unpaid contributions weaken that protection and place families at risk. “When contributions are not paid, that protection is compromised, and the consequences extend far beyond the workplace.”
MIBCO urges urgent compliance
MIBCO reminded employers that retirement fund contributions must be paid by the seventh day of the month following the month in which they become due. The Motor Industry Retirement Funds currently allows payment by the end of the following month under a 30-day exemption period.
Masemola said MIBCO’s focus was to protect workers from being exposed because of employer non-compliance. “Our mandate is to ensure that employees in the motor industry are not left exposed due to administrative or financial non-compliance by employers,” he explained.
Masemola added that retirement fund contributions were not optional obligations. He said, “This ruling strengthens the principle that contributions are not optional; rather, they are fundamental to maintaining protection for workers and their families.”
MIBCO has urged employers to immediately review payroll systems, ensure contributions are properly calculated and introduce strict payment controls to avoid arrears.
Masemola said employers should treat retirement fund contributions with the same urgency as salary payments. He said, “Employers must treat contribution payments with the same priority as wages.”
Masemola added, “This is not just about regulatory compliance; it is about ensuring that workers and their families are protected when they need it most.”
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