MUNICIPAL workers whose pension fund contributions have not been paid to schemes will be left with no recourse.
National Treasury did not have the power to take direct measures against a municipality that had not paid, according to Finance Minister Enoch Godongwana.
In response to a parliamentary question from DA MP Samantha Jane Graham, Godongwana said Treasury could only act in Section 139 of the Constitution if the province had failed to exercise its oversight over a municipality.
In her question, Graham cited the non-payment of pension contributions by the Dr Beyers Naudé Local Municipality in the Eastern Cape to third parties.
According to Godongwana, by 15 December 2020, the municipality did not follow through on its commitment to settle all the outstanding amounts.
It has since made a number of payments from January 2021, including current and outstanding debt.
By 8 September, the total outstanding pension debt stood at R16.4 million, which is a reduction by 50% since January 2021.
“As the Pension Funds Act currently stands, the Dr Beyers Naude Municipality is required to pay over pension contributions, in terms of the rules of the fund, deducted from member’s remuneration within seven days of the end of the month.
“Further, interest is payable on the late payment of contributions, which starts running from the first day of the end of the month in terms of Regulation 33[7].
“Regulation 33 [of the Pensions Fund Act] further requires the monitoring person, usually the principal officer, to bring the non-compliance to the attention of the affected members and advise the Financial Sector Conduct Authority [FSCA] of the action taken.”
He said: “If the non-compliance persists after 90 days, the principal officer must report the matter to the SAPS. Should the board of the fund not take the requisite action against the employer, it may face regulatory action.”
Treasury does not have the power to take direct measures against a municipality that has not paid; as such power resides firstly with the provincial government.
“The powers of the National Treasury are very limited in following up on non-payment by municipalities and can only intervene via a province in terms of Section 139 of the Constitution.
“National Treasury is working on amending the Public Finance Management Act [PFMA] and Municipal Finance Management Act [MFMA] to put in place a stronger framework to deal with non-payments on tax, pension contributions, as well as to suppliers like Eskom and water boards.”
Godongwana said until further legislative changes were made to the MFMA, the power of Treasury to directly intervene in a municipality was limited.
He added its action was often restricted to a form of moral suasion and naming and shaming, or if it was suspected there was a case of criminal action, to refer such a matter to the police for further action.
Employees of the SA Post Office have become the latest victims of the non-payment of their medical aid contributions to Medipos – the medical aid scheme for postal workers.
Last month, Medipos principal officer Thabisiwe Mlotshwa said the scheme had not received full contribution payments for 15 months.
- Fin24
