Run on Numbers: Missed Pension Fund contributions leave SA’s (social) security in the balance

When scrutinising the list of transgressors even further, it is surprising to find how many companies seem to be in the private security cluster Photo:

When scrutinising the list of transgressors even further, it is surprising to find how many companies seem to be in the private security cluster Photo:

Published Oct 6, 2023


The Financial Sector Conduct Authority (FSCA) recently published its Communication 21 of 2023 – Publication of names of employers with arrears contributions. The communication provided the names of 3262 employers that contravened section 13A of the Pension Funds Act, which prescribes the way the payment of contributions and other benefits should be made to an employer’s retirement fund.

The Regulator found that a total of 5,430 employers were in contravention of the PFA as of 30 April 2023. Twenty-eight per cent of the employers had contributions outstanding for one month, 24% for two to 12 months, 23% for 13 to 60 months and 25% for five or more years. The publication at this stage reflected only those employers who have outstanding contributions for a period of four or more months.

It is inconceivable that there are companies that remain in arrears after 12 months. The boards of trustees need to be held accountable. Furthermore, in a country with so much unemployment, we should not condone employers who exploit their workers in such a fashion. In addition, one must take into consideration the profile of the people offended, taking into consideration that the bargaining council and municipal funds are the most affected.

The FSCA’s preliminary statistics indicated that municipalities and private sector companies have R1 billion and R6 billion arrears contributions, respectively. The consequences of this transgression have profoundly serious implications. “If the employer does not pay over contributions for a period of three months, the insurer will repudiate the claim on the basis of outstanding premiums, and the dependants, in the case of a death benefit, will not be paid the insured portion of the death benefit payable from the fund.”

When scrutinising the list of transgressors even further, it is surprising to find how many companies seem to be in the private security cluster. This is particularly worrisome as we, the people affected, are often armed workers, and exploitation of these workers poses an additional safety risk to society.

The private security industry in South Africa is among the largest in the world, with over 9 000 registered companies, 450 000 registered active private security guards, and a further 1.5 million qualified (but inactive) guards. That is many times more than the available personnel currently employed by the South African Police Service and Defence Force. The South African security industry has been in existence for many decades and is one of the most sophisticated in the world. The South African security industry increased by an annual 30% in the 1970s, 1980s and 1990s, and the current growth rate is estimated to be at 15%. Whilst the security market itself comprises many segments, the South African industry today can justifiably be said to consist of 4 key technology segments:

  • Access control
  • CCTV surveillance
  • Intrusion detection and alarms
  • Fire protection

Other important and competitive sectors include asset tagging (primarily in the retail sector), physical and perimeter security, vehicle security and IT security. According to the latest statistics, the overall security industry in South Africa - commercial, industry and domestic - is estimated to be worth an annual turnover of R180 billion, and the percentage of security income turnover to gross domestic product is said to be one of the highest in the world.

Originally mainly an importer of security products, South Africa is now a vibrant exporter of security services and products i.e. riot gear, electrified fencing, razor wire fencing, traffic barriers, electronic access control systems, remote, outdoor beams, radio transmission systems, security uniforms and footwear, alarm control software, safes, bullet resistant doors and screening, fire resistant safes and cabinets, vaults and doors, access control booths, access control panels, security seals, and two-way radio equipment. The local industry has also recently seen the emergence of inventors who have produced a wide range of access control systems that continue to rejuvenate the industry. Given the above backdrop, the security industry in South Africa is poised for growth due to opportunities presented by the local market, which have translated into competitiveness at an international level.

According to a Small Arms Survey on gun ownership in around 230 countries of revolvers and self-loading pistols, rifles, carbines, assault rifles and sub- and light machine guns held by civilian, military, and law-enforcement groups, there are now more than one billion firearms in the world. 857 million (85%) are in civilian hands, 133 million (13%) are in military arsenals, and 23 million (2%) are owned by law enforcement agencies.

The new studies suggest that the global stockpile has increased over the past decade, largely due to civilian holdings, which grew from 650 million in 2006 to 857 million in 2017. Virtually all countries show higher numbers, although national ownership rates vary widely, reflecting factors such as national legislation, a country’s gun culture, and historical and other factors, the report found. National ownership rates vary from about 120.5 firearms for every 100 residents in the United States to less than one firearm for every 100 residents in countries like Indonesia, Japan, Malawi, and several Pacific Island states.

Police Minister Bheki Cele said South Africa’s police officer-to-citizen ratio is currently 1 to 383. This is almost double the international standard of 1 to 220. Cele said there are currently 193 000 officers in the country, with the SAPS looking to hire a further 14,000 in the next three years.

South Africa also has a massive private security sector, which dwarfs the current police force, according to the latest 2018/2019 report by the Private Security Industry Regulatory Authority (PSIRA). The report estimates that as many as 2.36 million security officers are registered in South Africa – with 498 435 currently employed by just over 9,000 registered and active security businesses. This means that there are as many 2.5 security guards for each police officer in the country.

So, the point is that messing with guns for hire’s nest egg is probably not a good idea. But also, Regulators need to find a better way to keep in line. Because just reporting on it, just doesn’t cut it.

* Kruger is an Independent Analyst