When can employers legally deduct from or withhold an employee’s pension payout?
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Kagiso Lebethe - Senior Employee Relations Specialist talks When can employers legally deduct from or withhold an employee’s pension payout?
If an employee causes an employer damage through dishonesty, theft, fraud or misconduct, the South African Pension Funds Act, 1956 provides that the employer may, in certain circumstances, recover losses from the benefits payable to that employee when the employee ceases to be a member of the fund or retires.
However, this will only apply if the employee has admitted liability in writing to the employer or if a judgment has been given against the employee in any court.
An employer could, however, encounter problems if the employee has not admitted guilt and demands payment of their benefit in circumstances where the employer has yet to obtain a judgment against the employee. In this situation, the courts have held that, in appropriate circumstances, the trustees of the fund may withhold the payment of the benefit, or a part thereof, pending the employer obtaining a court order.
In the past, the Pension Funds Adjudicator has been hesitant to sanction the withholding of retirement benefits from employees in the absence of a court order being obtained by the employer against the employee, unless extremely compelling reasons to do so existed.
If an employee causes an employer damage through dishonesty, theft, fraud or misconduct, the South African Pension Funds Act, 1956 provides that the employer may, in certain circumstances, recover losses from the benefits payable to that employee when the employee ceases to be a member of the fund or retires.
However, this will only apply if the employee has admitted liability in writing to the employer or if a judgment has been given against the employee in any court.
An employer could, however, encounter problems if the employee has not admitted guilt and demands payment of their benefit in circumstances where the employer has yet to obtain a judgment against the employee. In this situation, the courts have held that, in appropriate circumstances, the trustees of the fund may withhold the payment of the benefit, or a part thereof, pending the employer obtaining a court order.
In the past, the Pension Funds Adjudicator has been hesitant to sanction the withholding of retirement benefits from employees in the absence of a court order being obtained by the employer against the employee, unless extremely compelling reasons to do so existed.
