Municipal employees receiving only half their expected payouts
Municipal employees who have invested their pensions with the Municipal Employees’ Pension Fund are up in arms after the fund’s management unilaterally halved their resignation benefits following a Financial Services Board (FSB) report indicating that the fund had incurred a loss of R103.3 million.
The fund’s 13 000 members have been seeking intervention to regain the funds since 2013, without any success. This after it became apparent that members who resigned and decided to cash in their pension funds received only half the money they expected.
Fund members are spread across various municipalities throughout the country, but the fight has been vehemently waged by City of Ekurhuleni employees through the SA Municipal Workers’ Union.
The FSB report, leaked to City Press, has made adverse findings against the fund. One of the findings – which may be the reason for the cuts – was that the fund incurred a loss of R63 million on investments in May 2012 and a further R40.3 million loss on the revaluation of investments in February 2013.
The FSB also found that Akani Unclaimed Benefits Fund did not prepare cash flow statement reports in order to help the fund monitor all the cash inflows and outflows on a monthly basis to determine net cash flows. Other findings were that:
The fund’s principal officer had an office on the premises of the administrator, Akani Retirement Fund Administrators;
There were instances where contributions were not transmitted into the fund’s bank account;
Unclaimed benefits that accrued in the fund were being transferred to the Akani Unclaimed Benefits Fund;
The reduction of withdrawal benefits was applied retrospectively prior to the process’ registration date of April 1 2014; and
The fund was used as a conduit to pay premiums towards a funeral benefit that was insured under a separate policy.
The Municipal Employees’ Pension Fund’s management committee, which comprises two directors from the fund administrator and the fund’s board of trustees, decided to cut the members’ withdrawal benefits by half in July 2013 without consulting the workers or giving reasons. This, said the workers, made them believe that their investments were being mismanaged.
The FSB report indicated that the fund had incurred a loss of R103.3 million before the decision was taken. The decision was applied retrospectively from April 1 2013.
Representatives of the fund did not respond to written questions sent by City Press more than two weeks ago, despite making promises to do so during the week.
Two former Ekurhuleni employees – Beauty Makinta and Teboho Jele – told City Press they were shocked when they discovered their benefits had been halved when they resigned to take jobs at other institutions.
Makinta, a former messenger and driver, said she expected to get about R80 000 when she resigned in 2013 following five years in the employ of Ekurhuleni.
“They only gave me R40 000 and they refused to give me more when I asked,” Makinta said.
Jele, a former senior manager for public transport operation, said that for his seven-year service at Ekurhuleni he expected to get about R400 000 when he resigned, but was paid R190 000.
“I was aware these cuts affected all employees and we’ve been busy fighting this matter over the past four years,” Jele said.
An employee at Limpopo’s Greater Sekhukhune District Municipality, who declined to be named, said she was shocked to discover that if she were to resign now, after 10 years of service, her payout would be R215 000.
“I expect to get R800 000 for having worked such a long time. When I checked my statement, I was shocked,” said the employee.
Chairperson of the concerned members’ task team Tommy Mokoena said the employees first went to the Pension Funds Adjudicator in 2013, but their complaint was dismissed and they were referred to take the matter to the high court if they felt they had the grounds to do so.
Mokoena said the fund had started implementing its management committee’s decision without approval from the FSB, which approved these cuts in April 2014.
“The fund is not telling us anything. We’re raising money to pay lawyers and take the matter to court,” he said.
The FSB conducted a compliance visit to the Municipal Employees’ Pension Fund, but did not release its findings to the fund members. This hampered their plans to take the matter to court, they said.
FSB spokesperson Tembisa Marele declined to comment about the findings and recommendations following their visit to the fund.
“The FSB is constrained by the provisions in section 22 of the Financial Services Board Act (1990) from disclosing any information obtained during such investigations,” Marele said.