The short answer is yes. Section 37D (1)(b)(ii) of the Pension Funds Act 24 of 1956 allows employers to request the pension fund to withhold or deduct members’ pension benefits under certain circumstances. The situations to which the Act refers are dishonest conduct, misconduct, fraud, theft or negligence which caused a loss for the employer.
They must firstly obtain a court order that confirm member liability and secondly the member must have acknowledged liability in writing.
The circumstances listed below are those for which an employer can make a retirement fund withhold or deduct benefits:
– There must be a retirement benefit payable by a pension fund.
– There must be an amount due by the member to their employer on the date of their retirement or on the date which they discontinue to be a member of the fund.
– Where it is proven that members caused financial harm to their employers.
– Where the employee was found guilty of dishonest conduct, misconduct, fraud, theft or negligence in the workplace.
– Where members admitted liability in writing, or a judgement has been obtained in a court of law against the member.
– The specific amount of compensation or damages suffered be outlined in the written admission or court of judgement.
An employer can provide additional information to the fund relating to:
– The nature and rand value of the damage caused by the member.
– South African Police Service (SAPS) case number.
– Disciplinary hearing proceedings, internal enquiries/notices of dismissal of the member.
– Completed withdrawal claim form.
– Copy of the summons/notice of motion/letters of demand and any other evidence.
Employers are encouraged to obtain a court order as soon as possible as they may not be able to recover their loss after the retirement moneys have already been paid out and spent.
The only alternative to obtaining a court order is to obtain an admission of liability and acknowledgement of debt (AOL and AOD) from the employer, which should also be accepted by a pension fund.