Answer to a question from a reader

Can my employer withhold my provident fund for damages for which I am responsible?

The short answer

The employer cannot withhold any provident fund benefits himself. He has to ask the provident fund for permission.

The whole question

Can my employer withdraw my provident fund if I damage something, and I agree to pay the damage every week on my wages? How is my provident fund affected? Which documents must they have in order to withdraw my provident fund?

The long answer

Thank you for your email asking if your employer can withhold your Provident fund if you have damaged something and have agreed to pay for the damage every week from your wages.

In the first place, your provident fund can only be affected when you have applied for your provident fund benefits to be paid out. This can only happen when you have left your work, or have been dismissed.

You apply for your benefits with a withdrawal claim form which your employer must complete and give to you. He may not withhold the completed withdrawal form, but must fill in on the form that there is a claim pending against your benefit.

The employer cannot withhold any provident fund benefits himself: he has to ask the provident fund to consider either delaying paying out your benefit or deducting an amount from your benefit as compensation. The trustees of the provident fund must consider both your rights and the rights of your employer when all the information has been provided.

In terms of Section 37 D of the Pensions Funds Act, the fund can deduct from your benefit an amount to compensate your employer for the damage, but only if:

1) You have admitted liability in writing for the amount the employer wants to claim from you (this is called an Admission of Liability or AOL).


2) You have been found guilty in a criminal or civil case laid against you by your employer of committing fraud, theft, dishonesty or misconduct which has resulted in your employer suffering damage. (In terms of Section 300 of the Criminal Procedure Act, you must not only be found guilty, but the employer must request a compensation order, for damages to be paid.)

The fund has the right to delay payment of your benefits until the criminal or civil case is settled, but the Pension Funds Adjudicator has specified that it cannot use this right “unreasonably or indefinitely”.

For an Admission of Liability (AOL) to be accepted by the fund, it has to include the following:

1) You admit that you owe the employer for damages that you have caused;

2) You agree on the amount to be deducted and paid to the employer;

3) You include a detailed description of how the damages were caused;

4) You have signed it;

The employer must present the AOL to the fund to ask for a deduction from your benefit. Only if the fund is satisfied that the AOL is enforceable will they agree to the deduction of an amount from your benefit to be paid to the employer. If the amount to be deducted is equal to your whole benefit, the fund can deduct your whole benefit.

Besides the AOL (or a civil or criminal judgement with a compensation order), the employer must submit the completed withdrawal claim form.

If you are unhappy with the decision of the provident fund, you can submit a complaint to the Pensions Fund Adjudicator, but you first need to submit a complaint to the provident fund itself and it has 30 days to reply to you. If they don’t reply or you are not satisfied with the reply, you can complain to the Pensions Fund Adjudicator, including your letter to the provident fund and their reply. The Adjudicator then gives the provident fund 30 days to reply. The Adjudicator then looks at the facts and decides who is right. It can take up to 15 months to get the Pension Adjudicator’s decision as there is a long waiting list.

You can contact them here: [email protected]

Answered on Nov. 27, 2019, 11:59 a.m.

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Please note. We are not lawyers or financial advisors. We do our best to make the answers accurate, but we cannot accept any legal liability if there are errors.