COSATU
South Africa’s biggest trade union federation, the Congress of South African Trade Unions (COSATU), has raised a red flag over a sharp rise in employers who are not paying workers’ pension contributions, a problem that now threatens the financial safety net of almost 600,000 people. In a strong statement on Sunday, COSATU spokesperson Zanele Sabela pointed out that the number of these defaulting employers has more than doubled in just one year, leaving billions in unpaid funds and putting families at risk of losing out on key benefits like death and disability cover.
This growing crisis hits hardest in sectors like automotive, private security and municipalities, where workers already face tough times from job cuts and poor pay.
COSATU warns that without quick fixes, this could lead to even bigger troubles for the economy and people’s lives, as retirement savings get eaten away by missed growth and legal hurdles. The union is pushing hard for better checks and tough action against those breaking the rules, calling on the government to step up and protect hard-working South Africans.
The alert comes from the latest Financial Sector Conduct Authority (FSCA) report, which shows a massive jump in non-payment cases, with losses now topping R7.29 billion.
As the country deals with high joblessness and rising costs, this issue adds more pain for families relying on these funds for a secure old age.
Dramatic Surge in Defaults: FSCA Report Reveals Alarming Trends
The FSCA’s latest figures paint a worrying picture, with 15,521 employers now failing to pay up—a huge leap from 7,700 in 2024 and just 4,000 back in 2023. [0] This means nearly 592,000 workers across 67 retirement funds are caught in the crossfire, with their hard-earned savings at stake. [19] The total debt has ballooned to R7.29 billion, up 40% in just 15 months to March 2025, showing how fast this problem is spreading.
COSATU’s Sabela called this trend “disturbing”, noting how it robs workers of vital protections and eats into their future wealth through lost interest and growth.
The FSCA has already flagged over 1,000 of these employers to the police for breaking the law, a step that could lead to fines or even jail time.
But many say this is just the tip of the iceberg, with hidden arrears coming to light thanks to the new Two-Pot system, which lets people dip into savings but highlights unpaid debts.
Experts warn that without stronger rules, this could worsen, hitting the whole pension industry and leaving more families in a bind when they need help most.
Hard-Hit Sectors: Automotive, Private Security and Municipalities Bear the Brunt
The crisis is worst in a few key areas, where job pressures and poor management make things even tougher. In the automotive world, firms are struggling with a 30% US tariff on exports, leading to shutdowns like Goodyear’s plant closure and Ford’s plan to cut over 470 jobs.
This instability means less cash flow, pushing some to skip pension payments and leaving workers without a safety net just when they need it.
Private security companies top the list of offenders, with over 2,000 firms defaulting and owing around R6 billion.  COSATU has slammed these outfits for landing big government contracts while short-changing their staff, calling it a slap in the face to workers who risk their lives daily.  The sector, which employs hundreds of thousands, sees guards going months without pay-ins, hitting their families hard when accidents or deaths strike.
Municipalities are not far behind, owing R1.4 billion across 10 funds and affecting thousands of public servants.  Workers here often deal with unpaid salaries due to bad management, and now pension skips add insult to injury.  Cases like Mafube Local Municipality, hit with a R14 million court order for non-payment, show how courts are stepping in to force compliance, but many more slip through.  This mess stems from cash-strapped councils battling debt and poor revenue, but it leaves employees without retirement hopes after years of service.
Breaking the Law: What Section 13A Says and Why It Matters
At the heart of this storm is Section 13A of the Pension Funds Act, which makes it clear: employers must deduct contributions from pay and hand them over by the 7th of the next month.  Late payments rack up interest, and bosses can face personal fines or jail for ignoring this.  The rule aims to protect workers’ money, ensuring funds grow through compounding and benefits stay active.
COSATU says these defaults are a straight-up breach, robbing people of their rights and leaving them exposed in tough times.  Directors can now be held personally liable, a change that puts the heat on company heads to fix up or face the music.  Yet, enforcement has been spotty, with the FSCA stepping up by naming and shaming defaulters and pushing for blacklisting. 
For workers, this means lost growth on savings—every month delayed could shave thousands off retirement pots over time.
Worker Impacts: How Defaults Clash with the Two-Pot System
The timing could not be worse, with the new Two-Pot Pension system letting people tap into savings for emergencies since September 2024.  But defaults make this harder, as unpaid funds mean smaller pots and blocks on withdrawals.  Workers lose out on compounding returns, where money grows on itself over years, turning small skips into big losses. 
The system splits savings into accessible and locked pots, but arrears expose hidden debts, forcing many to chase employers for what’s owed.  COSATU warns this hits low-paid folks hardest, worsening poverty and inequality in a country where retirement often means scraping by.  Plus, lost benefits like disability cover leave families in the lurch during crises, adding to the human cost of this mess.
COSATU’s Pushback: Nedlac Talks and Campaigns for Change
COSATU is not sitting idle, teaming up with government arms like the FSCA and Department of Employment and Labour for fixes. At Nedlac, where unions, bosses and officials hash out issues, talks are rolling on better enforcement and support for hit workers. Agreements there aim to beef up checks and stop rewarding defaulters with tenders.
The union is ramping up drives in hard-hit sectors, naming and shaming firms while pushing for full paybacks with interest. Sabela said they want the government to lead by example, blacklisting lawbreakers and ensuring public contracts go to clean hands. This builds on past calls, like urging probes into schemes that skim workers’ savings.
Government Steps Up: Massive Boost in Labour Inspectors by 2026
A big win in the works is the plan to pump up labour inspectors from 2,000 to 22,000 by 2026, with 10,000 new recruits in 2025 and another batch the next year. This tenfold jump aims to crack down on defaults and other labour wrongs, giving teeth to laws like Section 13A.
The Department of Employment and Labour sees this as key to better oversight, hiring graduates to fill gaps and hit non-payers hard. COSATU backs this, saying it will help spot issues early and hold bosses accountable. With more eyes on the ground, the hope is to cut defaults and rebuild trust in the system.
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