Image for illustrative purposes. Picture: iStock
Over half of the country’s municipalities are behind in paying their employees’ pension fund contributions.
The Ministry of Finance recently revealed the figures during a written parliamentary question and answer session on 6 November.
Alarmingly, the outstanding figure stated by the ministry would account for R5.4 million for every municipality in the country.
The question was posed by the Economic Freedom Fighters (EFF) in response to the Bloemfontein High Court judgement ordering a Free State municipality to repay millions in unpaid contributions.
The Mafube Local Municipality was in September found to have failed to transfer R38 million to the Municipal Workers Retirement Fund (MWRF) after having deducted the amounts from employees.
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The finance minister noted that Mafube was one of 58% of the country’s 257 municipalities that were in arrears on pension fund contribution payments.
“Based on the information provided by the Financial Sector Conduct Authority (FSCA), 149 municipalities were in arrears as at 31 March,” the ministry’s reply stated.
The ministry went on to explain that the combined amount owing from those 149 municipalities was a staggering R1.4 billion.
Questions were asked as to where the unpaid contributions were used or if any criminal cases had been opened in relation to the unpaid contributions.
“The National Treasury does not have the details on how the funds were used,” the finance ministry stated.
“The National Treasury is not aware of any criminal charges filed against officials who failed to pay-over pension fund contributions,” they added.
National Treasury acknowledged a query sent by The Citizen on Tuesday but no response had been received at the time of publication.
Democratic Alliance Member of Parliament Wendy Alexander, who also serves of the Standing Committee for Finance, said further details are being sought.
“We are asking in the finance committee that we get a full report on and full disclosure about which municipalities are not paying,” Alexander told The Citizen.
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Regarding the recourse for municipal employees, Alexander added that they may report non-payment of their contribution to the pension fund themselves.
“Secondly, they can file a complaint with The Pension Funds Adjudicator,” she added.
The Pension Funds Act of 1956 (PFA) requires employers to deduct pension contributions from employees’ salaries and transfer those funds within seven days, failing which is a criminal offence.
“Under the PFA, employees and beneficiaries can file criminal charges against municipalities that fail to transfer pension contributions to the pension fund, as this practice is both illegal and may constitute criminal misconduct,” Alexander concluded.
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