EFF statement on the debt owned by local govt municipalities to municipal pension funds
3 September 2024
The Economic Freedom Fighters (EFF) has noted the worrying Financial Sector Conduct Authority (FSCA) report, that has highlighted that 172 municipalities owe an amount of more than R1 Billion in pension fund contributions.
The report paints a worrying picture, wherein South African local government municipalities have been deducting money from their employees, and not paying it towards the pensions of workers. This blatantly reckless behaviour, is a ticking time bomb that places municipal workers at financial risk.
The biggest offending municipalities of this violation of Section 13A of the Pension Funds Act are George Local Municipality and Mossel Bay Local Municipality in the Western Cape, which have not paid their pension contributions in over 200-months.
Both of these municipalities are governed by the coalition partner in the national government, the Democratic Alliance (DA).
Municipalities such as the Umsunduzi Local Municipality which is controlled by the African National Congress (ANC) and the Nquthu Local Municipality which is controlled by the Inkatha Freedom Party (IFP) owe municipal pension funds for over 100-months respectively.
It must be noted that these four local municipalities, which are jeopardising the financial security of workers, are governed by the ruling so-called "Government of National Unity". Therefore, governance in South Africa is clearly plagued by what can be characterised as malicious non-compliance in order to create crisis, and provide private sector intervention as the only viable solution.
The solution to this rising debt to municipal pension funds will undoubtedly be that when crisis hits, these municipalities will pursue loans from the banking and financial sector, which will be underwritten by the State and further enrich the funders of the DA and ANC respectively.
Of more concern, is that this crisis of non-payment of pension funds by employers, happens under the context of the adoption of the Revenue Laws Amendment Bill of 2023, popularly known as the two-pot system, which allows members of pension funds to withdraw savings without retiring.
Put simply, security guards and municipal workers will attempt to withdraw money from pension funds using the two-pot system, whereas their employers have not been making the required contributions. As a result, there is a dangerous crisis pending that will affect the working class, because there is no money in their pension funds.
The EFF will not allow this and, as a result, we will instruct all of our public representatives in local municipalities to write letters to the municipal managers in local government, to outline whether they have been making the required monthly contributions to the municipal pension funds of workers. All municipalities must account how much they individually owe the municipal pension funds and present repayment plans if they are in arrears.
Issued by Leigh-Ann Mathys, National Spokesperson, EFF, 3 September 2024
