Virgo Abrahams, Independent Contributor to EBnet

The Financial Sector Conduct Authority’s (FSCA) recently published another list of employers participating in pension fund organisations (Funds) that deducted retirement fund contributions from employees’ salaries but failed to pay those contributions to the Funds concerned. The publication understandably focused attention on employers’ failure to comply with section 13A of the Pension Funds Act read with Conduct Standard 1 of 2022: Requirements related to the payment of pension fund contributions.

However, viewed through the lens of a Fund or a benefit administrator, the publication raises a broader question, namely, what does this intervention say about the board of trustees’ ability to detect, escalate and mitigate foreseeable harm to members?

Contrary to common belief, timely and regular payment of retirement fund contributions this is no longer only an employer compliance issue. It is increasingly becoming a governance, conduct and operational resilience issue for key stakeholders in the retirement fund ecosystem.

Retirement funds are custodians of members’ interests.

The primary purpose of a Fund is to safeguard members’ retirement savings. Every unpaid contribution represents more than a statutory breach; it is a direct reduction in a member’s retirement savings. Members lose investment growth, risk cover may lapse or a claim may be declined, benefit calculations may be affected, and confidence in the retirement system is eroded. From this perspective, contribution arrears should not be viewed merely as an administrative exception requiring only a “follow-up” approach.  Instead, it should be recognised as an emerging conduct risk requiring immediate and meaningful intervention.

Benefit administrators are the industry’s early warning system.

Benefit administrators, if the activity is outsourced, occupy a unique position within the retirement fund industry value chain. Unlike the FSCA, benefit administrators have immediate visibility of contribution flows on a daily or monthly basis. They are often the first to identify missed contributions, late payments or deteriorating employer payment patterns. This places benefit administrators in a critical governance role to guard against an emerging conduct risk.

The question is no longer whether benefit administrators have complied with the minimum reporting requirements under section 13A and the related conduct standard. Increasingly, the question is or should be (if not already) whether they have acted expeditiously to protect the interest of members and minimise any harm.

Early detection, proactive engagement with employers, timely escalation to the boards of trustees, monitoring persons, principal officers and robust reporting to the FSCA is becoming indicators of good conduct rather than merely good administration.

The governance expectations are changing.

Historically, section 13A compliance has often been viewed as a technical administrative process. That approach is outdated. The FSCA’s increasing focus on transparency and public accountability demonstrates that it is not only interested in whether breaches occurred and were reported, but rather how the board of trustees and benefit administrators responded once those breaches were identified.

This requires boards of trustees to ask difficult questions, such as:

• Are contribution arrears being reported in real time?
• Do trustees receive meaningful trend analysis rather than simple exception reports?
• Are repeat offenders identified early and proactively monitored?
• Is the appointed responsible person held accountable by the employer before the before members suffer material prejudice?
• Are benefit administrators using data analytics to identify employers showing early signs of financial distress?

These are not merely compliance questions but broader governance questions.

Operational resilience is becoming a competitive advantage.

Operational resilience is often associated with cyber security, technology failures and disaster recovery. Resilience, when applied specifically to conduct risk, means to ensure that operational capability to protect members is maintained when employers fail to meet their statutory obligations.

Benefit administrators with mature data capabilities can identify payment trends, recurring defaults and systemic weaknesses long before significant arrears accumulate. Those capabilities enable early detection, intervention, better oversight by the board of trustees and ultimately better outcomes for members.

In an environment of increasing regulatory scrutiny, operational resilience is no longer simply about keeping systems available, it is about ensuring that governance processes actually continue to protect members under adverse conditions.

Looking ahead…COFI in the pipeline

The forthcoming Conduct of Financial Institutions (COFI) legislative framework is expected to accelerate this shift to improved fair conduct outcomes. COFI moves conduct regulation beyond technical compliance towards an outcomes-based approach centred on fairness, governance and the prevention of foreseeable harm.

Viewed through this lens, an employer’s failure to ensure regular and timeous payment of contributions is not just a statutory contravention. It is an indicator that members are already experiencing financial harm which impact fair retirement outcomes or are at risk of doing so. This has important implications for Funds and benefit administrators.

With COFI well on its way, Funds and benefit administrators will not only be judged on whether they have fulfilled their reporting obligations, but also on whether they have appropriate governance, systems, controls and organisational culture in place to identify and mitigate risks before members suffered financial prejudice.

Put differently, the regulatory conversation is shifting from “Did you report the problem?” to “What did you do to prevent or minimise member harm?”

This approach and thinking represent a material shift in regulatory expectations.

The FSCA’s publication should therefore not be viewed solely as an enforcement action against – or compliance failure by defaulting employers. It should be treated as an opportunity for Funds, boards of trustees and benefit administrators to reassess how contribution monitoring fits within their broader governance and conduct frameworks.

The Funds and benefit administrators that will be best positioned for the COFI era will be those that move beyond compliance checklists and embrace proactive supervision, data-driven oversight, insights and early intervention.

Ultimately, Funds exist to protect members’ compulsory retirement savings. On the other hand, benefit administrators support the board of trustees to achieve the outcome through accurate, timely and effective administration.

FSCA Communication 12 of 2026 (RF) stands as a reminder to Funds and benefit administrators, that protecting retirement savings requires more than collecting contributions and reporting default employers. It requires governance that identifies risk or conduct red flags at an early stage, operational resilience that responds decisively and a culture that places members’ interests at the centre of every decision.

Ed’s note: For more on S13A, watch EBnet’s Industry Insights interview with Rodney Kekana, the Chairman of the PSSPF here.

ENDS