Home

Financially distressed workers can get a payment relief from their pension fund

Reading Time: 3 minutes

Employees experiencing financial difficulties due to the lockdown caused by the COVID-19 pandemic can get a payment relief from their pension fund. This means your pension fund contributions can be suspended for up to 12 months until your work situation is back to normal.

The Pension Fund Act also allows employers to stop their workers’ contributions if the company is in distress, even if the employees are regularly at work.

The Pension Fund Act caters for unforeseeable events such as the current nationwide lockdown. This is to assist both employers and their workers who may be experiencing financial difficulties because of a lack of income as well as debt obligations.

Some employers have had to scale down operations or temporarily shut down due to the lockdown restrictions.

Wealth and Financial Advisory Business Bruce Knight says, “There are difficult times, but there is an opportunity for employees to enter into discussions with their employers to reduce their contribution to relief them on expenses.”

A report by Naledi Matlapeng: 

 

Death and disability benefits

Employers may choose to suspend pension fund contributions when their employees are temporarily absent from work. But members will continue to have their death and disability benefits during their absence, and this would remain unchanged and not reduced even if their salaries reduced.

But risk premiums and administration fees will continue to be payable.

Bruce Knight says, “Why is there a need to still collect risk premiums there is a need to ensure that the death and disability benefits are kept in place in case the health issues occur.”

Another option is for employers to amend their employees’ pensionable salaries even if employees are working regularly. This is usually done as a preventative measure in order to stay in business.

But there has to be an agreement between the employer and the workers before this is implemented.

“It is legal to still stop the members’ contributions. This agreement will need to be subject to an agreement between employers and their staff.”

The financial consequences of the lockdown will continue to be felt by many employers and their workers as long as the spread of the coronavirus continues.

They will be forced to look at measures aimed at cutting costs such as amending pension fund contributions to stay afloat and remain sustainable.

The lockdown has had severe financial repercussions on many businesses as well as the economy at large.

In this video below, Human Resources Expert Nomihlali Ntsunguzi explains adjusting to new work environment amidst COVID-19:

Author

MOST READ