You're assuming that the companies doing this have the cash to pay your full salary before deductions.
If your income is less than you salary bill (which happened to a lot of companies during lock down) then effectively the companies are simply not covering the pension contribution. They're not actually deducting and pocketing the difference.
e.g.
10 employees paid R10000 per month with additional company pension contributions of R2000 each.
Bank balance at end of month = R80 000
Company owner scratches the R20 000 difference together (personal loan, company loan, sell assets, etc.) and pays each employee their R10 000 salary but doesn't pay their pension contributions totaling another R20 0000 because they simply don't have the money to do so.
Rinse and repeat for a few months and you get the picture.
People can jump on their high horse and point fingers about it being illegal but when a mom and pop shop can't pay for everything and faces laying off loyal workers it becomes an emotional decision with the hope that the business will recover and they'll be able to catch up with payments to pension funds, medical aid funds and SARS. Unfortunately that often never happens.
Actually it depends, big differance between not paying a deducation at all vs taking it off your salary and not paying it. The second is fraud and theft, straight. The first is grey.
So I will rant here about the first as it happened to me. If you work for someone and you have earn a salary, deductions etc, your CTC INCLUDES your pension. That is normally taken into consideration with regards to increases , performance etc and is a contractual commitment with the caveat that it was mandatory to take it out with the company. During COVID, hours were reduced due to constrained operations, understandable but by the same token, retirement etc is a calculation of gross so reduced hours equates to reduced contributions, all fair.
However, that company decided to unilaterally change their pension rules and suspend all contributions to the scheme. That meant that even if you worked hours, you never recieved the "matching" funds for the retirement. In my case , this was extreme as the retirement contributions in total equated to 20% of gross monthly salary ( split between employee and employer ). Yes, you still received the gross sans company contribution but after tax you actually only received a quarter ( remember its no longer going into the pension scheme so you would pay FULL tax on the money ).
Simple math calc, say R10k is the total contribution, you now lose R5k off the bat due to suspended contributions and you only pocket around R2.7k after tax on the rest for a net loss of over R7k. Thats a BIG chunk of change to take out of someones pocket, over and above the already reduced hours and income. You also still pay the monthly admin fees and dues on the pension scheme.
Long story short, after a fight around it, even to have the missing contributions as
per the reduced hours worked paid over at a later stage, both the scheme and company refused. Took the case to CCMA where neither bothered to pitch however it could not be enforced and as such would need to go to labour court to recover and hear arguments. Loss of funds not worth it as I had already made the move three months in to shift to a differant employer and my finances were mine to do with what I would. The pension adjudicator was useless as they never worked on the counter argument and just took the word that the scheme had deducted what they were meant to deduct and no extra ones or missing ones were in play as they had paid out the pension when I shifted.
Never again and I won't deal with that insurer/scheme either. Not going to name and shame in public forum but its definately a blocker in conversations and any business decisions I make or have stake in.
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