The Drakenstein Municipality says it is undeterred by a damning report recently published by the Financial Sector Conduct Authority (FSCA) in which the authority claims that the municipality is one of 3 262 employers who is an arrears with their worker’s pension fund contributions.
According to the FSCA’s report municipalities’ Municipal Councillors Pension Fund (MCPF) contributions were in arrears by R1 billion, while companies within the private sector were in arrears of up to R6 billion by April this year.
The Drakenstein Municipality has slammed the report and said all its municipal staff members’ pension fund contributions “are 100% paid-up” notwithstanding claims by FSCA that it was in arrears for up to 125 months by April.
The municipality further said none of its municipal staff were members of the MCPF, Riana Geldenhuys, municipal spokesperson told Paarl Post.
She said there was a long-standing dispute between two municipal councillors and the MCPF.
“These two councillors have no dispute with the municipality as the member and employer contributions are paid each month to a fund elected by them (the councillors) and are up to date. The underlying dispute arose when the MCPF was placed under curatorship as far back as 2017. The court on 23 March 2023 extended the curatorship for a further period.
“This particular fund experienced ongoing governance and compliance challenges for many years and as a result many councillors resigned from the fund. The Drakenstein Municipality is paying over all contributions of all our 65 councillors to the elected funds of their choice and therefore is not in arrears to the MCPF or any other fund.”
FSCA’s report could mean a compromise to the retirement benefits of members of a specific fund, to the extent that if an employer fails to make contributions for up to three months the member will likely not be paid the insured amount due to outstanding premiums.
Prof Piet le Roux, a labour law expert, believes the report paints an incriminating picture.
“In most cases the employer is under a full obligation to pay over its share plus the employees share of the pension contributions to the fund.
“For some of these employers listed here, it is likely that payments were never even made.
“The employee would receive a payslip that indicates the money has been deducted, but they won’t know whether the contributions have indeed been made.
“There could be several reasons for this. Some employers commit fraud while other simply don’t have the funds and then create the impression (on paper) that pension fund contributions are being deducted.”
Le Roux has advised employees who suspect irregular activities with their pension fund contributions to enquire directly with their fund.
“It could be quite a lengthy process, but these are funds that will ensure life after retirement,” he added. “In light of this report it would therefore be wise just to confirm whether your contributions are up to date.”
