Motor industry employers have been placed on formal notice following a recent ruling by the Financial Services Tribunal (FST), which reinforces strict consequences for non-payment of retirement fund contributions and confirms significant liability risks for employers who fall into arrears.
The notice, issued under Circular 2026/00026 by the Motor Industry Bargaining Council (MIBCO), highlights a binding judgment affecting all participating employers in the motor industry retirement fund system.
The ruling stems from a case involving a participating employer of the Motor Industry Retirement Funds (MIRF), where contributions were not paid timeously.
The Tribunal found that where an employer fails to remit retirement fund contributions, the employer (not the fund) becomes liable for the payment of risk benefits, including death and ill-health disability cover.
The Financial Services Tribunal, established under the Financial Sector Regulation Act 9 of 2017 (the FSR Act), is an independent body empowered to reconsider regulatory decisions within the financial sector (as defined in terms of section 218 of the FSR Act). Its rulings are legally binding.
According to the judgment, unpaid contributions have immediate and material consequences. Once contributions fall into arrears, the fund’s insurance protection ceases, meaning employees lose critical risk cover.
Under normal circumstances, MIRF provides death and ill-health disability benefits funded through monthly employer contributions. These benefits typically amount to the member’s fund credit plus a risk benefit equal to three times the employee’s last determined pensionable remuneration.
However, where contributions are not paid, that risk benefit falls away entirely.
In practical terms, this means that in the event of an employee’s death or disability, beneficiaries may only receive the accumulated fund credit with no additional risk benefit.
Paulos Masemola, General Secretary of MIBCO, says the ruling reinforces the importance of strict employer compliance and timely contributions.
“This judgment makes it unequivocally clear that employers carry the financial and legal risk when contributions are not paid over as required,” Masemola explains. “It is not only a compliance issue, but it also directly affects the financial protection of employees and their families.”
He adds that the ruling underscores MIBCO’s ongoing focus on safeguarding employee benefits within the industry’s collective bargaining framework.
“The purpose of the retirement fund system is to ensure that employees and their dependents are protected in times of death or ill-health. When contributions are not paid, that protection is compromised, and the consequences extend far beyond the workplace,” Masemola says.
The notice further reminds employers of their obligations under the Pension Funds Act and Basic Conditions of Employment Act. Employers are required to make contributions by the seventh day of the month following the month in which they are due. MIRF currently allows a 30-day exemption, requiring payment by the last day of the following month.
Failure to comply not only results in legal exposure but may also trigger loss of risk cover for employees without warning.
MIBCO warns that non-compliance can create a chain reaction of financial vulnerability for workers, particularly where death or disability claims arise unexpectedly.
Masemola notes that the intention of the system is not punitive, but protective.
“Our mandate is to ensure that employees in the motor industry are not left exposed due to administrative or financial non-compliance by employers,” he says. “This ruling strengthens the principle that contributions are not optional, rather, they are fundamental to maintaining protection for workers and their families.”
Employers have been urged to immediately review payroll systems, ensure contributions are accurately calculated, and implement strict payment controls to prevent arrears.
MIBCO has emphasised that consistent compliance is essential to maintaining the integrity of the industry’s retirement and risk benefit system.
“Employers must treat contribution payments with the same priority as wages,” Masemola concludes. “This is not just about regulatory compliance; it is about ensuring that workers and their families are protected when they need it most.”
The ruling marks a significant reinforcement of accountability within the motor industry’s retirement funding framework, placing renewed emphasis on employer responsibility and the protection of employee benefits.
“We want employers to understand that MIBCO’s role is supportive and advisory,” Masemola adds. “Our focus is on promoting compliance, protecting businesses from unnecessary reputational and financial risk, and supporting a stable, sustainable motor industry. Employers are encouraged to engage with our inspectorate, client services and credit control departments, as well as their employer organisations or unions, should they require guidance or support.”