Municipalities took more than R1.4bn from workers in pension fund deductions but failed to pay the Municipal Workers Retirement Fund (MWRF), according to finance minister Enoch Godongwana.
The minister revealed the information in parliament this week.
EFF MP Vuyani Pambo had asked the minister to give details about municipalities that used workers’ pension funds and failed to pay the retirement fund contributions.
Godongwana said only 108 municipalities out of 257 were compliant and paid workers’ pensions as of March 31.
“Based on the information provided by the Financial Sector Conduct Authority, 149 municipalities were in arrears as of March 31 2024. The total value municipalities owed to pension funds was R1,414,124,115. National Treasury does not have the details on how the funds were used,” he said.
Asked whether criminal charges have been filed against any municipal officials, Godongwana said it was up to the municipal councils to pursue criminal charges.
“The Municipal Finance Management Act places the responsibility of implementing consequence management, including the reporting of alleged incidences of financial offences, on the municipal council.”
Mafube local municipality in the Free State dominated the headlines for several years for owing workers’ pension funds. In September, the high court in Bloemfontein granted the fund an order to access the municipality’s bank records.
In 2021, the municipality was ordered to pay the municipal workers retirement fund R38m with interest, but failed. The municipality's bank accounts were attached but that was fruitless as it had only R97,000 in its bank account.
According to court papers the fund had been fighting for the payment since 2011.
“This practice by the municipality seems to have continued over the years; frivolous defences and nonpayment of its employees' pension fund contributions still remains unabated,” the judgment read.
The municipality would rather challenge each and every application brought to assist the pension fund members rather than pay its employees’ money to the fund
— Judgment
The court questioned the disappearance of the workers’ money as the municipality failed to give substantive reasons for what happened to the funds.
“The disappearance of the money of the employees of the municipality and members of the fund remains questionable. The municipality would rather challenge each and every application brought to assist the pension fund members rather than pay its employees’ money to the fund. There is a mysterious delay rather than a solution to an ongoing undisputed problem,” the judgment read.
The court said the municipality cannot continue to delay proceedings and delay the rights of the applicant's [the fund] members from being enforced.
It said nonpayment of the pension fund contributions is a serious breach of law.
“It is now time to act and compel the municipality to disclose all the necessary documentation that the fund requires to enforce the court order and writ of execution on the relevant bank account that holds money to eradicate this long outstanding problem and give proper effect to this court order. The interests of justice warrant same,” the court said.
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