Cash-strapped municipalities withhold millions in pension contributions

Issued by Bobby Stevenson, MPL
DA Leader in the Eastern Cape Provincial Legislature

The DA can reveal that at least five municipalities in the Eastern Cape have failed to pay over at least R42 million in staff pension contributions, citing cash-flow problems, even though the money has been deducted from staff payslips.

This is another warning light indicating the collapse of local government in the province.

The DA is demanding that Provincial Treasury deploy support to these municipalities immediately and ensure defaulting officials are dealt with. These rogue municipalities are in direct violation of several laws and are gambling with the futures of the staff in their employ.

We simply have to halt this trend!

The shocking revelations relating to municipal pensions were made by Finance MEC, Mlungisi Mvoko, in response to a parliamentary question from the DA.

MEC Mvoko revealed that the five municipalities, namely Dr Beyers Naude, Sundays River Valley, Great Kei, Amahlati and Walter Sisulu, collectively owed pension funds R42,797 million as of 1 April 2020.

A further R19,696 million in interest has accrued on these outstanding payments, which amounts to fruitless and wasteful expenditure.

SEE: IQP 46 Q 1100

A capable state would ensure that municipalities are financially sound and that budgets are managed to ensure that the municipality can meet its financial obligations.

MEC Mvoko confirmed that the non-payment of pension contributions was a violation of several laws in the Municipal Finance Management Act (MFMA), and yet the ANC-led provincial government has taken no action against these municipalities. He failed to add that it is also in contravention of the Pension Fund Act.

The MEC said no staff member had been impacted so far, as the municipalities calculate the outstanding amounts for employees who are about to retire and pay that amount to the pension funds.

It is only a matter of time, however, before these last-minute payments balloon out of control, which will result in staff losing their retirement benefits.

It is not enough to be aware of these irregularities, as MEC Mvoko states. These municipalities have broken the law, and the Department must act!

I call for MEC Mvoko to deploy support staff to these failing municipalities, as he is mandated to do under section 154 of the Constitution.

The DA will continue to fight to bring stability back to local government and ensure that the people of the Eastern Cape receive the services they deserve.