Msunduzi wins pension fund suit

2013-05-10 00:00

THE Msunduzi Municipality has saved municipalities across the country millions or rands.

It did this by winning a lawsuit against the Municipal Pension Fund, which wanted to increase the council’s contribution towards its employees’ pensions. On top of this, the fund wanted payment backdated 10 years.

The affair has been drawn out and while some municipalities had taken on the pension fund and lost, Msunduzi tried a different argument and won.

Judge Shyam Gyanda handed down judgment yesterday in favour of the municipality.

It all started in 2002 when the South Africa Local Authorities (Sala) pension fund found itself in financial difficulties. It set a scheme in place that entailed increasing the employers’ (municipalities’) contribution, going back 10 years.

Sala argued that its resolution on the increase was forwarded to the Registrar of Pension Funds and was approved in July 2006.

About 150 municipalities countrywide were affected. Most objected to the retrospective aspect of the amendment and did not pay what was owed.

Sala then took legal action against these municipalities. In these cases Sala won because the courts found that the fund was entitled to make retrospective amendments.

Msunduzi decided to tackle the matter differently after its legal team had studied the documentation relating to the matter.

It argued that the amendment was not compliant with the Pension Funds Act. The team said that the subsequent resolutions taken were inconsistent with the earlier resolutions of the fund. In terms of the obligations of the fund, there was not enough engagement and meaningful negotiations with the employees and municipalities concerned.

The team also argued that the amendment did not reflect the correct increase as recommended by the actuary engaged by the Sala’s board of trustees.

Judge Gyanda ruled that the amendment to the pension fund was invalid and that Sala had not made an adequate case to support its argument. He expressed his disappointment that the matter had to come before the court.

He stressed that the matter dealt with public funds on a large scale and that the parties should have made an effort to come together to resolve their dispute.

Municipal spokesperson Brian Zuma said that to the best of his knowledge, Msunduzi was the first municipality to win an action against Sala. He said the municipality was mindful of the judge’s words that when it came to public funds, greater effort must be made to negotiate a settlement.

“We have already begun to set up meetings with Msunduzi’s legal team and the South African Local Government Association [Salga] to formulate a way forward on this matter for all municipalities,” Zuma said.

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions. publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24


Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.