Municipality in hot water for failing to pay over R58m in workers’ contributions

Kopanong council in hot water over six-year pension payment drought

Pension Fund Adjudicator Muvhango Lukhaimane wins battles for fund members. /Thulani Mbele.
Pension Fund Adjudicator Muvhango Lukhaimane wins battles for fund members. /Thulani Mbele.
Image: Thulani Mbele.

The Free State’s Kopanong Local Municipality has failed to pay an estimated R58m in pension fund contributions collected from municipal workers over the past six years to the workers’ pension fund.

This emerged from an investigation by the Pension Funds Adjudicator following complaints by three of the municipal workers.

Your employer is obliged to pay over the contributions it collects from your salary as well the employer contributions (that form part of your salary package) to your pension fund.

But many employers fail to do so, contravening the Pension Funds Act in what amounts to theft of employees’ money.

And the failure of the board of trustees and the administrator of the South African Local Authorities Pension Fund, Fairsure Administration, to take action to force the Kopanong municipality to pay over the money has annoyed adjudicator Muvhango Lukhaimane, who has been campaigning against trustees and administrators who do nothing to stop employers who plunder members’ savings.

In the Kopanong case, Fairsure told the adjudicator that the municipality had not paid contributions since March 2013 even though it sent monthly communiques to the municipality regarding the unpaid contributions.

Lukhaimane says Fairsure indicated it was discussing the matter with a lawyer, but it did not appear to have taken any legal steps against the municipality.

The adjudicator says the fund’s trustees ought to have advised the Financial Sector Conduct Authority, which regulates the financial services industry, of the municipality’s failure to pay contributions and should have taken action to remedy the non-payment.

She says the duties of a board are “to take all reasonable steps to ensure that contributions are paid timeously to the fund in accordance with the Pension Funds Act”.

Lukhaimane has also been critical of the fund for failing to get the name of the person at the municipality who could be held personally liable for the non-payment of contributions and whose assets could be attached if the money was not paid over.

The fund needs to be proactive to ensure accountability and to better protect the interests of members, she adds.

The administrator was unable to confirm arrear contributions for each individual member of the fund and could only say that the municipality was in arrears to the tune of R58,4-million.

You have the right to receive regular information about your pension fund benefits from your fund. The rules governing contributions, the rate at which contributions must be deducted, and how often they must be paid to your fund are contained in the rules of your pension fund which the adjudicator describes as “supreme” and ”binding on officials, members, shareholders and beneficiaries of a fund”.

Lukhaimane has ordered the municipality to provide the fund with contribution schedules for the employees who complained to her within two weeks of the determination.

She has also ordered the municipality to pay the members’ arrear contributions to the fund, with interest, so that the fund could update the records of the affected members.

The fund was further ordered to provide the members with a breakdown of their contributions and their latest benefit statements within eight weeks of the determination and to continue to provide benefit statements as long as they remained with the fund.

The municipality did not respond when the adjudicator sent it the complaints.


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