Cosatu takes Free State councils to task for defaulting on pension contributions

The Congress of SA Trade Unions (Cosatu) plans to roll out mass action against Free State municipalities for repeatedly defaulting and not paying staff pension deductions to retirement funds.

Notorious defaulters include Xhariep, Thabo Mofutsanyane, Matjhabeng, Ngwathe, Metsimaholo and Maluti-A-Phofung, who owe pension funds millions in unpaid worker contributions.

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On Wednesday, Cosatu and its affiliate, SA Municipal Workers Union (Samwu), marched to the Welkom-headquartered Matjhabeng Municipality to demand the pensions and medical aid scheme debt be settled and salaries be paid on time.

Marches and protests are scheduled to follow at Metsimaholo, Mohokare and Maluti-A-Phofung from next week.

The union federation said some workers had since died while waiting for pension payouts, while others had no choice but to postpone retirement.

Payment through vouchers

In Mafube, Masilonyana, Tokologo and Kopanong late payment of salaries and owed salaries were the norm.

The municipalities had even switched to using grocery vouchers as compensation.

“Over the years, we have experienced serious problems with many municipalities in the province unashamedly failing to pay over contributions to the relevant funds,” said Cosatu in a statement.

“This has resulted in many workers being kept way beyond their retirement age on the wage bill due to the unavailability of money in the funds or being forced to retire penniless.

“Some workers have passed on, with their dependents left stranded because there are no monies or policies have lapsed due to non-payment,” the union said.

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Criminal cases have been opened against several municipalities and their entities, said the union federation.

“Cosatu and Samwu have raised this matter several times with the provincial government and South African Local Government Association (Salga), to no avail.

“The non-payment of third parties is a fraudulent criminal activity.”

Pensions crisis

The Financial Sector Conduct Authority (FSCA) this week published a list of employers that owe contributions, with some owing for more than five years.

According to the watchdog, at least 5, 430 employers had contravened the Pensions Funds Act (PFA) as of 30 April this year.

Hundreds of companies and municipalities are in arrears of R1 billion and R6 billion respectively, according to the entity.

“While financial difficulties faced by municipalities and the effects of Covid-19 on the economy are public knowledge, employers still have an obligation to their employees to pay over deducted contributions to the retirement fund as per the PFA,” the FSCA said.

Boards’ responsibilities

The FSCA said pension fund boards had a duty to recover outstanding contributions from employers and where applicable, report the defaulters to the police.

“The boards are required to report material contraventions to the affected members, and to the FSCA.

“Importantly, where the contravention persists for a period of 90 days, the boards are required to approach the South African Police Service (Saps) to lay a charge against the employer.”

The entity urged employees to first approach employers before taking up concerns with their respective funds.

“The FSCA is continuing to engage with the relevant authorities to ensure that the criminal element of this
contravention is effective.”