Liability to Pay Retirement Benefits when Contributions were not Paid to the Retirement Fund: A Reply to Mr Nkosi

Abstract

This paper responds to the fascinating article written by Mr Thulani Nkosi relating to the devastating effects of employers failure to pay over their employees' retirement funds contributions to the relevant retirement funds. In particular, I respond to Nkosi’s main argument that retirement funds should pay withdrawal benefits notwithstanding the fact that they did not receive members’ retirement fund contributions from contributing employers. I argue that while such an approach is understandable, it is nonetheless, legally unsound and further demonstrates that it is not supported by the law as it stands today. I further argue that Nkosi's reliance on the principle of equity as advocated by Professor John Murphy when he was the Pension Funds Adjudicator to a larger extent does not pay attention to how occupational defined contribution funds operates. The basis of my argument is that defined contribution funds rely on members' contribution and it would not be sustainable for these funds to pay retirement benefits to members whose contributions they did not receive.