Employers need to ensure that they have systems in place to make certain that pension fund contributions deducted from employees are correctly paid over to the fund administrators.

Failure to do so will be costly - you could well end up compensating your employee for the full pension withdrawal benefit, not just refunding him/her the contributions deducted.

That’s exactly what resulted from a recent ruling by the Pension Funds Adjudicator, where deductions were made from an employee’s salary although the employer had failed – in error - to register him as a member of the pension fund. 

The compliance onus is a strict one, the Adjudicator holding that “an employer who participates in a pension owes a duty of good faith to all employees who are members of the fund” and that an employer “stands in a fiduciary relationship with all its employees, especially in matters relating to their pension benefits”.