26/08/2026
Deducted but Not Paid: The Private Security Sector Provident Fund Contribution Crisis and the Burden Placed on Employees?
The private security sector is notorious for persistent challenges involving security companies (employers) that deduct provident fund contributions from employees’ remuneration but fail to remit those contributions to the Private Security Sector Provident Fund (“the Fund”).
The Financial Sector Conduct Authority (“FSCA”) has published a list of employers in the private security sector who are in default of remitting provident fund contributions to the Fund in FSCA Communication 12 of 2026 (RF). At the time of publication thereof, the list contained about 772 defaulting employers within the private security sector.
Employees often only become aware of the employer’s failure to make provident fund contributions upon termination of employment and/or retirement, when they submit claims for their withdrawal or retirement benefits. By that stage, employees are placed in a vulnerable position, as they are reliant on the Fund to determine and process benefits that should have accrued during their employment.
During the subsistence of employment, the Fund bears the responsibility of monitoring whether employers are complying with their obligations to make the prescribed provident fund contributions. However, it remains unclear whether the Fund adequately performs this duty in accordance with its rules, as employees are frequently only informed of contribution defaults when they attempt to claim their benefits.
In addition to monitoring employer compliance, the Fund is obligated to assist members in recovering the benefits they would have received had the employer complied with its contribution obligations. The Fund is also required to report defaulting employers to the FSCA.
Where no contributions are received for a period of 90 days, the Fund is required to report the material contravention to the South African Police Service (“SAPS”).
With the exception of reporting defaulting employers to the FSCA, my experience in dealing with provident fund matters involving the Fund has been that the Fund rarely assists employees in recovering arrear provident fund contributions from employers. In most instances, employees are forced to lodge complaints with the Pension Funds Adjudicator (“PFA”) to determine whether unlawful deductions were made from their remuneration and whether employers failed to comply with their statutory obligations.
Even after the PFA issues a determination ordering the employer to pay outstanding contributions, employees are often required to take further steps to enforce the determination. This includes incurring legal costs associated with enforcement proceedings, such as issuing writs of ex*****on through the Magistrates’ Court.
During the period in which provident fund contributions remain unpaid, the arrear contributions continue to accrue compound interest. Despite the Fund’s apparent failure to ensure compliance with the provisions of the Private Security Sector Provident Fund Rules and the Pension Funds Act 24 of 1956, and despite the legal costs incurred by employees in enforcing their rights, the Fund is nevertheless entitled, in terms of its own rules, to retain about 1/3 of the interest accumulated on arrear contributions.
This raises serious questions regarding the fairness of allowing the Fund to benefit from contribution defaults where employees have had to take legal action to recover monies that should have been secured through effective monitoring and enforcement mechanisms by the Fund itself.
The issue is not merely the failure of employers to remit contributions, but also whether adequate measures are being taken by the Fund to protect its members from the consequences of employer non-compliance.
By WorkRights SA Consultants
