AUTO WORKERS’ PROVIDENT FUND

MOTOR INDUSTRY PROVIDENT FUND

COMMUNICATION TO EMPLOYERS AND STAKEHOLDERS REGARDING CONTRIBUTIONS TO THE MOTOR INDUSTRY PROVIDENT FUNDS DURING THE NATIONAL LOCKDOWN AND THE IMPACT OF THE COVID-19 PANDEMIC

As you are aware, the President of the Republic of South Africa announced a countrywide lockdown which commenced on 26 March 2020 and remains in effect until 16 April 2020. Many workers in non-essential services in our country will either be placed on short time or work significantly 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) has 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 and the treatment thereof as a result of the impact of the Covid-19 pandemic. It is important to communicate the implications of this on our retirement funds. 

In terms of the rules of the funds 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.

If a worker works as normal, or for more than 23 hours in a week, the retirement fund contributions must continue to be deducted and paid over to the funds via MIBCO as required by the agreements and fund rules.

In terms of clause 6(1), read with the definition of ‘pensionable remuneration’, in the Auto Workers’ Provident Fund and Motor Industry Provident Fund Agreements, an employer is not compelled to deduct employer and employee contributions and pay via MIBCO to the Auto Workers‘ Provident Fund and Motor Industry Provident Fund if the employee works for less than 23 hours in that week. However, if an employee makes additional voluntary contributions to the funds, this must still be paid over to the funds.

If an employer has implemented short time for workers, or if the workers do not report for work at all, during the lockdown period and its workers therefore work less than the prescribed 23 hours in the week, the employer is not obliged to remit provident fund contributions in respect of such employees. An employer is also not obliged to pay its portion of the contributions in the absence of the worker’s portion not being paid. In the instances mentioned above, an employer is not required to pay provident fund contributions to the funds.