Analyses: ‘You break, you pay’: Pension benefits deductions for damage caused to the employer by the employee

• Jurisdiction: South Africa
• Pages: 578-588
• Published date: 25 May 2019
• Date: 25 May 2019
• Author: M E Manamela
• Citation: (2013) 25 SA Merc LJ 578

Analyses

‘YOU BREAK, YOU PAY’: PENSION BENEFITS

DEDUCTIONS FOR DAMAGE CAUSED TO

THE EMPLOYER BY THE EMPLOYEE

M E MANAMELA

Associate Professor, University of South Africa

I INTRODUCTION

Several provisions of the Pension Funds Act 24 of 1956 (PFA) protect

pension benef‌its. Thus section 37A prohibits the reduction, transfer,

cession, pledge, hypothecation, and attachment of benef‌its or the right

to benef‌its, except to the extent permitted by the PFA itself, the Income

Tax Act 58 of 1962, and the Maintenance Act 99 of 1998. Once a benef‌it

is paid out, it no longer has the status of a benef‌it (see Ehlers v Nedcor

Defined Contribution Provident Fund and Another [2001] 4 BPLR 1825

(PFA) para 15) and loses the protection provided by section 37A (see

Government Employees Pension Fund v Naidoo and Another 2006 (6) SA

304 (SCA)). Furthermore, section 37B of the PFA protects pension

benef‌its against creditors where the member becomes insolvent; while

section 37C protects pension benef‌its by stating that they do not form

part of the estate of the deceased member (see Mashazi v African

Products Retirement Benefit Provident Fund and Another 2003 (1) SA 629

(W) 632H-J). The reason behind this protection is that pension benef‌its

should be used to provide benef‌its for members on their retirement and

for dependants on the member’s death. Section 37C serves a social

function because it relieves the state of the burden of providing

social security to its citizens (see Lisa Shrosbree ‘To what extent does

section 37D of the Pension Funds Act protect employers from dishonest

conduct by their employees?’ (2005) 26 ILJ 17 at 24). A benef‌it is def‌ined

by section 1 of the PFA as ‘any amount payable to a member or

benef‌iciary in terms of the rules of [the] fund’ (see also National Tertiary

Retirement Fund v Registrar of Pension Funds 2009 (5) SA 366 (SCA)

paras 22–3).

Section 37D of the PFA is an exception to the rule, because it provides

for deductions that may be made from a member’s benef‌it. Amongst

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(2013) 25 SA Merc LJ 578

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