Can an employer withold payment of pension benefits?

Section 37 D (1) (b) of the Pension Funds Act, 1956 allows a Pension Fund a discretion to withold payment of an employee’s pension benefit in respect of an employee’s liability for compensation in respect of any damage caused to the employer by reason of any theft, dishonesty, fraud or misconduct by the employee.

The Labour Court has had no hesitation in giving practical effect to this provision and has been prepared to order a Pension Fund to withhold payment of a member’s pension benefits pending the determination or acknowledgement of such member’s liability as aforesaid.  In so doing the Pension Fund has to balance the competing interests between the prospects of the employer’s claim and the potential prejudice an employee may suffer if not permitted to access his pension benefits on an urgent basis.

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