Pension Funds need to ensure that they comply with their new obligations because the Financial Services Laws General Amendment Act came in to operation on 28 February 2014.
All the amendments to the Pension Funds Act with the exception of the amendments to sections 5(a) and 31 will need to be complied with from the date of commencement.
Amongst the latest Pension Funds Act amendments is the drastic provision that directors who are regularly involved in the management of a company’s overall financial affairs will be personally liable where the company fails to pay contributions to a pension fund. Where a fund requests the identity of the relevant director and the company fails to furnish the required information then all the directors of the company will be personally liable for the failure to pay contributions.
The penalties have also been increased. A person who contravenes section 13A of the Pension Funds Act (relating to the payment of contributions) is guilty of an offence and liable on conviction to a fine not exceeding R10 million or to imprisonment for a period not exceeding 10 years or to both a fine and imprisonment.
It is clear that there will be severe consequences for directors where the company fails to comply with section 13A. Directors must ensure that the company has operating procedures in place which ensure compliance in order to avoid personal liability.