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Social Security Authority are not only contravening the law and liable to penalties, surcharges and prosecution but disadvantaging their employees.
Contributions to the national pension fund by every employee in formal employment and his or her employer are compulsory in terms of the law. The employer is also required by law to make contributions to the Workers’ Compensation Insurance Fund.

It is the employer’s responsibility to register each employee with NSSA. It is also the employer’s responsibility to deduct from every employee’s wage the employee’s national pension contribution and remit it together with the corresponding employer’s contribution to NSSA.
By law, the employer has to remit six percent of each employee’s basic salary, up to a maximum salary of $200 per month, to NSSA by the 10th of the month following the salary payment. Half of the contribution (three percent) is deducted from the employee’s salary, while the other half (three percent) comes from the employer. Late payments may attract financial penalties.

The employer is also obliged to pay a Workers’ Compensation Fund premium for each employee.
Failure to remit the contributions to NSSA is a criminal offence. Deducting the employee’s part of the contribution from his or her salary but failing to hand it over to NSSA or, worse still, converting it to the employer’s own use, may amount to fraud or theft by conversion, since the money is deducted specifically for payment to NSSA.

The worst consequence of failure to comply with the law in respect of remitting national pension fund contributions and Workers’ Compensation Fund premiums is not, however, the penalties that the employer may incur but the fact that employees and their families may be deprived of the benefits they should be entitled to.

Every employee in formal employment should be registered with NSSA, have the requisite contributions and premiums paid for them to NSSA and be able to benefit from the National Pension Fund and Workers’ Compensation Fund when they retire or are injured in a work-related accident.

In the event of the employee’s death, benefits are payable to the employee’s family. This includes a US$200 funeral grant, which can be obtained within 15 minutes of the necessary documentation being provided to NSSA.

However, these benefits can only be paid in respect of those who are registered with NSSA and for whom contributions and premiums have been paid.
It is important, therefore, for employers to register their employees with NSSA and keep their contribution and premium payments up to date. It is important too to ensure that when employees leave employment and a new employee is engaged, that NSSA is informed of this by submitting to it the requisite forms duly completed. Otherwise, contributions that are being made for an unregistered employee may be presumed to be for a former employee who has left.

When they become eligible for benefits, the unregistered employee will be ineligible, while the one who is registered but has left will have contributions credited to him or her which he or she has not actually made.

Compliance with the statutory requirements in relation to the national pension fund and Workers’ Compensation Fund is therefore not only in the employer’s interests but even more importantly in the employee’s interests.

Compliance is in the employer’s interests because NSSA is entitled to impose hefty penalties and surcharges for failure to make the required contributions and premium payments. Moreover, because failure to comply is a criminal offence, the defaulting employer is liable to prosecution.

An employee who has had contributions deducted from his or her salary but not had these payments passed onto NSSA could bring a case of fraud or theft against the employer.
They can also hold the employer liable for failure to access the benefits he or she would have been entitled to had the payments been made to NSSA.

Because the national pension fund is a contribution-based scheme, benefits can only be accessed if contributions have been made.
Moreover, when an employee retires and becomes eligible for a pension from NSSA, the number of contributions that have been made are taken into account in assessing the pension to which he or she is entitled.

That is why employers who did not register when they should have done must, when they finally do register, and make back-payments for the contributions they have missed.

• The Talking Social Security column is published each week by the National Social Security Authority as a public service. Readers who have any questions they would like dealt with in this column are welcome to e-mail their questions to [email protected] or text them to 0772-469801.