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What happens when an Employer needs to recover monies owed to them by an Employee – can such funds legally be accessed from their Pension and/or Provident Fund?

As a proud Employer, we at ASI fully appreciate the multitude of risks faced on a daily basis. Today, we wish to share our view relating to a common risk amongst Employers:

What happens when you an Employer needs to recover monies owed to them by an Employee – can such funds legally be accessed from their Pension and/or Provident Fund?

What happens if your employee is unable or unwilling to repay you the monies owed, or even part thereof?

Did you know that you could access their Retirement and/or Provident Fund, subject to certain criterion being met, and provided you are within the Law?

Per Section 37D of the Pension Funds Act, the onus is on the Employer to prove to the Trustees of the Fund that several steps have successfully been taken before the Trustees may consider and/or allow any benefit to be paid directly to the Employer. These include:

  1. Was an actual investigation performed and concluded by the Employer?
  2. Has evidence been provided by the Employer to substantiate the claim including the Rand value of the loss?
  3. Has an official SAPS case been opened by the Employer?
  4. Is there already an acknowledgement of debt signed by the Employee?
  5. Has the Court provided a final judgement and, in whose favour has this judgement been found?

Once all of these questions have been sufficiently answered, only then will the Trustee(s) be in a legal position to allow for such a withdrawal and direct payment to the Employer.

A classic example of this scenario is when an Employee is found guilty of theft or misappropriation of company funds.

However, it must be noted that the Employer may apply to the Trustees of the Fund to halt any payment of the Pension and/or Provident Fund due to the Employee upon their resignation or termination and until such time as a Court of Law finds the Employee guilty. With that being said, and due to the fact that the Court could take years to finalise this decision, the Trustees of the Fund may not unnecessarily or indefinitely suspend any payment due to the Employee, and this decision remains at the Trustees decision as whether or not to execute on the request of the Employer.

It’s equally important to note that, should an Acknowledgement of Debt already be signed by the Employee concerned, the Trustees of the Fund may consider this legal acknowledgement as being sufficient in terms of releasing of such funds to the Employer on behalf of the Employee.

In closing, partnering with ASI means partnering with expert problem solvers who are passionate about preserving their clients’ wealth and changing lives for the better. We do this by way of sound, strategic advisory-related services in the Employee Benefits, Health, Insure, Invest and Retirement space.

It’s therefore vital that you consider partnering with independent industry experts, such as ASI, who can help you navigate your strategic business & individual risks to help sustain the health and longevity of your business.

Source: https://chro.co.za/press-releases/asi-shares-view-relating-to-common-risk-to-employers/