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

JurisdictionSouth Africa
Citation(2013) 25 SA Merc LJ 578
Date25 May 2019
Pages578-588
Published date25 May 2019
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
578
(2013) 25 SA Merc LJ 578
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