Retirement time bomb for ethekwini

Carries financial obligation for medical benefits

THE eThekwini Municipality spent more than R1 billion on medical benefits for retired municipal employees last year, and with that figure set to grow, the city is facing a financial “ticking time bomb”.

This emerged during a meeting of the council’s executive committee (Exco) yesterday in a report presented by the city’s audit committee.

A total of R1.2bn was paid towards post-retirement medical benefits in the financial year that ended in June last year, the report said.

Audit committee member Peter Christianson said the benefit spending had been a serious concern for the committee for the past four years he had been a member.

He said paying for the benefits would have an adverse effect on the future financial sustainability of the municipality.

“It’s a ticking time bomb and it’s going to escalate and even go above inflation. It will go way out of proportion,” he said.

Christianson stressed the city needed to consider removing the benefit. “It will cause the city serious problems going forward,” he said.

Deputy mayor Nomvuzo Shabalala said she was also concerned about this benefit as it meant they were still paying for people who were no longer employed by the municipality.

Shabalala said they needed to determine if they were bound by the law with regard to the benefit.

“We need to get an understanding on this because a precedent has been set and it’s not easy to just remove it. We do, however, have to find a solution,” she said.

Shabalala said if the benefit were to be removed, the unions were going to fight it on the grounds that the previous regime had benefited from it.

Patrick Pillay, of the Minority Front, said this was not about denying people medical aid.

“We, however, need to make certain that this issue does become a legal process. I am, however, sure the National Health Insurance will balance this issue out,” he said.

Speaker Logie Naidoo said also of concern were those who had enjoyed the benefit post-1996.

“We need to get a report telling us about who is getting this benefit. It’s something from the past and it’s still haunting us,” he said.

City manager Sbu Sithole said this benefit was not something they could just dissolve on their own, as it affected all municipalities.

“We have to look at what has been done. We have a number of pension funds which were not there at the time. We do need to look at this issue,” he said.

Sithole said what was also of great concern to him was that the city was obligated to the beneficiaries until they died.