For pen­sions

Mu­nic­i­pal em­ploy­ees re­ceiv­ing only half their ex­pected pay­outs

CityPress - - Business - SIZWE SAMA YENDE sizwe.yende@city­press.co.za

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.

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