In my first communication to stakeholders on 31 March 2020, I informed stakeholders of the options available to employers in respect of contributions payable to our Funds. Since this time there have been further developments. The state of national disaster and lockdown was extended to 30 April 2020 and it is now envisaged that there will be a phased return to work as announced by Government. It has also been recognised that the impact of the Covid-19 pandemic on the world economy is going to be severe and that most countries, including South Africa, will suffer negative economic growth this year and the near future. This poor economic outlook has an impact on all businesses and those employers participating in our Funds are not immune to such macro-economic pressures. The immediate impact is that many workers are either on temporary absence, short time or are working fewer hours than the normal 45 hours per week and this has an impact on the payment of retirement fund contributions.

The Financial Sector Conduct Authority (FSCA) issued Communication 11 of 2020 (RF) titled “COVID-19: Section 13A of the Pension Funds Act, 1956 and financially distressed employers and employees – submission of urgent rule amendments” on 26 March 2020, which deals with the payment of retirement fund contributions as a result of the impact of the Covid-19 pandemic. At this critical time in our country it is important to communicate the various options available to participating employers in terms of the rules of our Funds.

Our rules provide that the payment of contributions to the Auto Workers’ Provident Fund and Motor Industry Provident Fund is dealt with in terms of the provident funds agreements and main agreement in the motor industry collective agreement. In addition, the FSCA has approved additional rules which cater for the employer that finds itself in a distressed financial position. It has been emphasised though that even if retirement savings contributions are not paid, an employer must try as far as possible to still pay the cost of risk benefits to the Funds for it will jeopardise members and their families if an event such as death or ill-health occurs but the Fund is not in a position to pay the risk portion of the benefit.

The various different options available to employers depending on their circumstances in relation to the payment of contributions to our Funds are set out in the table below:-

1Employee works and receives a salary for working more than 23 hours in a week.Normal contributions payable.Submit contributions and schedules via MIBCO return system.
2Employee not at work and not receiving salary.No contributions payable.Submit change in pensionable salary for employee via MIBCO return system.
3Employee works but for less than 23 hours in a week.No contribution payable.Submit change in pensionable salary for employee via MIBCO return system.
4Employee works normal weekly hours but by agreement receives a reduced pensionable salary.Contributions payable on adjusted pensionable salary.Submit contributions and schedules via MIBCO return system.
5Employee works normal hours but Employer in financial distress and Fund accepts application for relief (see below).No contributions, or lesser contributions payable in terms of fund agreement with employer.Submit change in pensionable salary for employee via MIBCO return system. Include acceptance letter from Fund.

All through option 1 – 5 above, the Funds will continue to accept payments of any Additional Voluntary Contributions.

The payment of risk benefits and administration costs must continue as far as possible and the respective rates of contributions in this regard are 2.35% and 1.70% for the Auto Workers’ Provident Fund and Motor Industry Provident Fund respectively, of the employer’s contribution of the last pensionable salary before the national lockdown was implemented.

Option 5 has been introduced in the Funds’ rules in light of the extra-ordinary economic circumstances in our country due to the Covid-19 pandemic. The Funds recognise that employers may find themselves in a very poor financial position during this period and they will need time to recover financially before they are back in a financially neutral position. In order to assist an employer that finds itself in this position, the Funds will allow the employer to apply to them to alter their contributions to the Funds. It must be noted that an employer will only be given this relief if it applies for it and if the Funds accept that it is in financial distress.

Only fully completed forms and certifications will be considered. The employer will be informed of the fund’s decision as soon as possible but not later than 30 days after receiving a properly completed application.

Implementation of the special relief measure for suspension of contributions must only take place after receiving an acceptance letter from the Funds and for the period granted. To the extent that the employer’s condition changes during the suspension period and it is able to re-commence contributions before the end date, it must do so.

All completed applications with required attachments must be sent via electronic mail to:

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