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Can I recover damages from my employee’s pension fund?
14 January 2020
 
“One of my employees damaged a company car by driving under the influence. He refuses to pay for the damages so I want to get a court order against him. However, he does not have much in the way of assets to cover the damages, so I was wondering if I can claim against his pension fund, seeing that he will retire soon. Can I do this?”

Section 37A(1) of Pension Fund Act 24 of 1956 determines that, save to the extent permitted by this Act, the Income Tax Act, 1962 (Act 58 of 1962), and the Maintenance Act, 1998, no benefit provided for in the rules of a registered pension fund or right to such benefit, or right in respect of contributions made by a member, shall be capable of being reduced, transferred, ceded, pledged, etc, or be liable to be attached or subjected to any form of execution under a judgment or order of a court of law.

Section 37D(1)(b)(ii)(bb) of the Pension Fund Act, however, creates an exception. It provides that a registered fund may deduct any amount due by an employee (fund member) to his employer on the date of the employee’s retirement, or on the date on which the employee ceases to be a member of the fund. Such deduction must be for compensation for damages caused by the employee to the employer due to theft, dishonesty, fraud or misconduct, and in respect of which judgment has been obtained against the employee in any court, including a magistrate’s court. Such deduction will be from any benefit payable to the member (employee) or a beneficiary of the member of the fund, in terms of the rules of the fund, and will be paid to the employer concerned.

Should you consider instituting action against your employee and wish to recover any damages awarded from the employee’s pension fund, it would be prudent to inform the pension fund of your intention to institute action and request written confirmation from the pension fund that, pending the finalization of the action to be instituted, the pension fund undertakes to withhold any payment of benefits to the employee or the employee’s beneficiaries, pending the outcome of the action instituted by you against the employee as member of the pension fund. 

Should the pension fund refuse or fail to give such an undertaking or fail to pay any amount claimed under Section 37D(1)(b)(ii)(bb), you can consider approaching a court for an interdict or order against the pension fund and stop the fund from making any payments of benefits to the employee or the employee’s beneficiaries or requiring the fund to pay the judgment amount to you as employer under Section 37D(1)(b)(ii)(bb).