Pension or provident fund savings are probably one of the most important types of savings you can have towards your retirement, but you may not realise that you could be denied access to your money.
"Your employer could have your pension benefit withheld should you be found guilty of causing any damages," says John Cranke, National Head of Employee Benefits at PSG Wealth.
Employers can ask their retirement fund to deduct a specific amount from an employee’s pension benefit as compensation for damages caused to the employer.
"This could be due to theft, dishonesty, fraud or misconduct," Cranke adds.
The employee will then have to wait for the outcome of court proceedings related to the damages before his or her pension benefit is paid out.
"Divorce can also bring about complications," he says.
A pension benefit might be withheld if the employee is going through divorce proceedings and waiting for a final maintenance order to be issued. However, this does not apply if the divorce order will only be issued once the employee has left the company’s employ.
Steps your employer must follow
To ask a retirement fund to withhold benefits, the employer must notify the fund in writing and provide the following information:
• the nature of the damage caused by the employee
• the rand value of the damage caused
• the date the employer began his or her investigation into the alleged misconduct
• confirmation of legal, civil or criminal proceedings, or the reasons for not initiating such proceedings
• any applicable SAPS case information
• the amount claimed in civil court
• a copy of the letter of demand
• confirmation of proceedings and how far they have progressed when employment was terminated or suspended
• any other factors that may influence the case
"Keep in mind, however, that no matter what the allegations or nature of any crimes committed are, an employer does not have the necessary authority to withhold the completed withdrawal form to delay or stop payment to an employee," Cranke says.
The completed withdrawal form must be provided to the employee, and the employer must indicate on the form that there is a pending claim against the employee.
Once this information has been provided to the fund, the fund and its trustees will use their discretion to decide whether or not a benefit is withheld. The following factors must be considered;
• the above substantive requirements
• the value of the benefit
• the losses suffered by the employer, including the legal costs for recovery
• if the employer has taken reasonable steps to institute proceedings
• if there has been any unreasonable delay on the part of the employer in prosecuting the claim
"There are plenty of reasons to always put your best foot forward at work, and safeguarding your retirement savings is another important reason to do so," Cranke concludes.