Pension Benefits and Employer's rights to withhold funds
The Pension Fund Act of 1965 was created so that there is security and protection of an employees' retirement funds preventing the malpractice of employees' funds not being paid out.
There is an instance though where if there is damage to the Employer then the funds could be withheld.
Usually pension benefits are accessible as soon as the employee is entitled to withdraw against the respective employees' pension fund. Instances where funds can be withdrawn:
- When the employee reaches retirement
- Where the fund is terminated
- When the employee is dismissed
A retirement may deduct amounts owed to an employer when the employee retires or accesses the fund. This is possible as a result of 37D(1)(b)(ii) of the Pensions Fund Act.
In instances where an employer is trying to lay a claim of financial damage against an employee, it is important to note this claim can only be pursued with admission by the employee in writing or a case as a result of:
- Fraud
- Theft
- Misconduct
- Dishonesty
In order for any employer to have any success in claiming against an employee benefit, then this must be done as speedily as possible as there is a process to follow in the legal system and this takes time.
Many employers never get there claims in before the funds pay out and this usually results in lost opportunity to recover from damages.
A recent case known as the Highveld Steel & Vanadium Corporation Limited v Oosthuizen 2009(4) SA 1 (SCA) (the Highveld case) is a case that dealt with exactly this. The employee was fired on charges relating to bribery, theft, fraud and dishonesty. The employee tried to take out their retirement however the employer approached the court to instruct the pension to withhold the benefit.
As much as the Pension Fund Act protects the Employee, it also protects the Employer if the Employee misappropriates funds.
The conclusion of the Highveld case resulted from the interpretation of section 37D(1)(b)(ii), to mean that the power and discretion to withhold payment of a member's retirement benefits pending a judgement should be included in the interpretation of this section.
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