Durban - eThekwini Municipality has yet to act on concern expressed by its audit and risk committee over post-retirement medical aid benefits for staff that cost ratepayers more than R1 billion a year.
In April last year, the committee raised the alarm about the future financial sustainability of the municipality if the benefit continued.
This came after it was discovered that in 2011-2012 the city spent R1.2bn on medical aid for retired employees.
The committee recommended the benefit be withdrawn for future employees, fearing the amount would continue to escalate, crippling the city.
Spokeswoman Tozi Mthethwa would not give details of how much was being spent on this benefit.
Instead, she said, medical aid was a “national competence” in terms of the main collective agreement of the SA Local Government Bargaining Council.
“The municipality has not taken any formal decision. With regard to the costs of medical aid for retirees, this information is confidential and cannot be shared with a third party,” she said.
In Cape Town, the benefit has already been withdrawn for new employees.
Councillor Xanthea Limberg, a mayoral committee member for corporate services, said that for the current financial year, Cape Town was spending R13 491 800 on medical aid benefits for its retired municipal employees.
Limberg said this benefit was subsidised at a rate of 70 percent for all employees who started their service with the city before December 2000 and who have retired.
A little more than 6 800 retired employees are getting this benefit.
Limberg confirmed that the city was not extending the benefit to employees who started their service after 2000.
“This is a historical benefit that was protected by the legislation which transferred employees from the previous administrations to the municipality in 2000,” she said.
In the 2011-2012 financial year, the Joburg municipality spent R95 million on medical aid benefits for retired employees.
There too the benefit is being limited.
Concerned councillors in eThekwini agreed that the matter needed to be dealt with urgently.
IFP councillor Mdu Nkosi said they strongly believed the benefit should be stopped for future employees.
Even the amount that was paid in 2012 was too much, said Nkosi.
“We need to face reality.”
NFP councillor Bongiwe Mtshali said with national health insurance looming, the municipality would have no excuse to continue with the benefit because everyone would have access to private hospitals.
Mtshali said the money spent on the benefit could be used towards service delivery.
“There is so much that still needs to be done. It is crucial that the municipality find a solution soon,” she said.