The Financial Sector Conduct Authority’s (FSCA) recent enforcement actions has put South African industry under sharper scrutiny, making pension and healthcare compliance impossible to ignore. The FSCA Tribunal’s landmark ruling in March 2025 sent a clear message: employers cannot simply opt out of industry-administered retirement and medical funds without following the formal exemption process.

“The ruling comes at a time when national compliance failures are rising sharply,” says Paulos Masemola, General Secretary of The Motor Industry Bargaining Council (MIBCO). In a release dated 25 September 2025, the FSCA reported that as of 31 March 2025, 15,521 employers in default across multiple sectors, with arrears and late-payment interest exceeding R7.23 billion. This shortfall potentially affects hundreds of thousands of retirement-fund members, highlighting the seriousness of the compliance challenge.

The ruling has reshaped the compliance landscape. Directors can now be held personally liable for non-contributions under Section 13A of the Pension Funds Act. Failure to pay contributions is not only an administrative breach, but also a criminal offence that can carry fines of up to R10 million or even imprisonment.

Within the motor industry, retirement funds play a central role in ensuring compliance with regulatory requirements.  Together, they form the backbone of financial protection for workers across the motor industry. With FSCA oversight tightening, governance of retirement and medical funds has become one of the most critical responsibilities for motor industry employers.

The Motor Industry Retirement Fund (MIRF) is one of the country’s largest and most stable industry funds, managing over 232,307 active contributors and more than R62 billion in assets as of October 2025. The Motor Industry Provident Fund (MIFA) provides a lump-sum provident option that ensures continuity when employees change employers. Motor Health Care (MHC) offers primary medical cover at negotiated rates, securing GP care, chronic medication and basic hospital benefits for thousands of lower-income workers.

“These funds create a uniform safety net across the industry,” says Masemola. “Whether you work in a dealership, a workshop, components manufacturer, filling station or a fitment centre, you receive consistent, reliable benefits. This is what stabilises the motor sector workforce and when employers comply, the entire industry is stronger and more sustainable.”

National trends further underscore the need for stronger governance: only around 36% of South Africans belong to a retirement fund. For many motor-industry workers, the motor industry retirement funds are the only structured retirement and risk benefits they will ever access.

Employer compliance obligations are governed by the Motor Industry Provident Fund Agreement, Autoworkers Provident Fund Agreement, Pension Funds Act, the MIBCO Main Agreement, individual fund rules, and FSCA conduct standards. Key requirements include accurate payroll data and employee categorization, timely deduction and payment of contributions, proper payroll reconciliation and submission of monthly returns, and maintaining valid exemption certificates where necessary.

Masemola notes that smaller and mid-sized businesses often struggle most. Poor payroll data remains one of the biggest challenges. “Incorrect categories, outdated salaries, or missed reconciliations easily lead to arrears, incorrect benefits, unallocated payments and delayed or unpaid claims,” he says.

Confusion around exemptions is another recurring issue. Some employers assume that MIBCO registration gives them the choice to opt in or out of industry funds. Others believe that contributions to a private fund automatically exempt them from industry obligations.

“These are dangerous misconceptions,” Masemola stresses. “Participation is compulsory unless the employer has a formally approved exemption that is current and valid. Exemptions require renewal, monitoring and ongoing alignment with industry standards.”

Exemptions are granted only when an employer offers an alternative fund that provides equal or better benefits than the industry funds. Importantly, financial difficulty, employee refusal, or contributions made to another fund without official approval do not create an exemption.

“Employers sometimes think they have an option not to contribute,” Masemola says. “But the scope of application is clear. Fund agreements apply to all employers and employees in the sector unless a lawful exemption exists.”

The consequences for employees are severe. When contributions are deducted from wages but not paid over, workers permanently lose retirement savings, investment growth is reduced, and access to benefits becomes delayed or even denied. For lower-income workers, who often have no alternative safety net, the impact is especially serious.

“Non-compliance doesn’t just break the law, it breaks trust,” Masemola emphasises. “It undermines a worker’s future. We are dealing with people’s life savings and their financial stability.”

To strengthen compliance, MIBCO has expanded its education and support mechanisms. The FSCA’s increased scrutiny aligns closely with these efforts. “We already have strong governance systems,” says Masemola. “We continuously update our processes to match FSCA regulations as they evolve, and our partnership with the Motor Industry Fund Administrators (MIFA) and Motor Industry Retirement Funds (MIRF) is key in ensuring that employers and employees are educated and assisted to comply with industry regulations.”

Looking ahead, MIBCO plans to deepen industry partnerships, expand employer training, enhance digital oversight, and improve monitoring tools to prevent arrears, address unallocated payments and streamline exemption renewals.

To meet their obligations and strengthen workforce stability, MIBCO urges all employers to:

• Review your exemption status to ensure it is valid and up to date.
• Check payroll categorization and salary accuracy to prevent arrears and incorrect benefits.
• Reconcile contributions regularly to identify, correct discrepancies early and submit monthly returns by the 10th of every month.
• Engage with MIBCO’s compliance support teams for guidance, training and digital tools.

“Good governance is not an administrative burden. It is a promise to every worker in the motor industry,” Masemola concludes. “Protecting pensions means protecting futures. That is the standard we must all uphold.”