Which section in the pension funds act deals with late payment interest for contribution?

Question: Which section in the pension funds act deals with late payment interest for contribution?

If you are an employer who participates in a pension fund for your employees, you may be wondering which section in the Pension Funds Act deals with late payment interest for contribution. This is an important question, because late payment interest can have significant financial implications for both you and your employees.

The Pension Funds Act is the main legislation that regulates the operation and governance of pension funds in South Africa. Section 13A of the Act specifies the obligations of employers to pay contributions to pension funds on behalf of their employees. It also sets out the consequences of failing to do so.

According to section 13A(7), if an employer fails to pay the full amount of contributions to a pension fund by the due date, the employer must pay interest on the unpaid amount at a rate determined by the Registrar of Pension Funds. The interest rate is currently 15.5% per annum, compounded monthly.

The interest accrues from the first day of the month following the due date until the date of payment. The interest is payable to the pension fund, and forms part of the fund's assets. The fund may use the interest to offset any losses or expenses incurred as a result of the late payment, or to enhance the benefits of the members.

The purpose of section 13A(7) is to discourage employers from delaying or defaulting on their contribution obligations, and to protect the interests of the members and beneficiaries of pension funds. It also ensures that employers who comply with their obligations are not unfairly disadvantaged by those who do not.

If you are an employer who is struggling to pay your contributions on time, you should contact your pension fund administrator as soon as possible and try to make arrangements to settle your arrears. You should also seek professional advice on how to manage your cash flow and avoid further penalties.

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