Finance Minister Enoch Godongwana said there were nine municipalities that had disclosed information on arrears of monthly statutory contributions to pension funds.
Of the nine municipalities, six collectively did not pay more than R81.5 million collected from employee pension contributions to the pension funds.
This emerged when Godongwana was responding to parliamentary questions from DA MP Rochelle Spies, who asked for a list of municipalities that were in arrears with the payment of their mandatory contributions for staff and councillors.
Godongwana said the National Treasury collected outstanding creditor’s information via the Local Government Database and Reporting System (LGDRS) on a monthly basis.
“Although the list of outstanding creditors includes pension fund contributions, it does not provide a breakdown for outstanding medical aid contributions, but this category is lumped under other payables.
The National Treasury is putting measures to facilitate the collection of such information for further purposes.
“Another challenge is that some municipalities might choose not to disclose this information in their submissions to the National Treasury’s database, which makes it challenging to get an accurate picture of municipalities owing the pension funds.”
Godongwana also said only four municipalities in the Free State and five in the Northern Cape had disclosed the information on arrears of monthly statutory contributions to pension funds.
The Kai Garib Municipality, which has defaulted since February 2022, was in arrears by R30m.
The Renosterberg Municipality has defaulted since May 2017 and owes R19.1m in pension fund and medical aid contributions.
The Ubuntu Municipality, which has been in arrears since March 2023, owed third parties R3.4m while Thembelihle Municipality owed R5.1m since December 2021.
The Kheis Municipality has been defaulting since July 2021 and is in arrears by R19.9m while the Magareng Local Municipality is in arrears for R4.3m and has been defaulting since March 2021.
The National Treasury has the power to stop the transfer of the equitable share to a municipality when it persistently fails to honour its financial commitments under certain conditions.
These include the requirement that municipalities report on the non-payments to the South African Revenue Service, with pension and other staff benefits deducted from municipal officials to be paid over the appropriate funds and/ or institutions.
Godongwana said the National Treasury had communicated the criteria for the release of the Equitable Share in its annual budget circulars.
“Included in the criteria is the requirement to table a funded budget in terms of Section 18 of the Municipal Finance Management Act (MFMA) as well as making adequate provision to repay all creditors in terms of Section 65(2)(f) of the MFMA.
“Every time we receive correspondence from the respective pension funds administrators on outstanding payments or accounts, the National Treasury will send a letter to the respective municipality requesting reasons as to why they have defaulted.”
The minister said none of the municipalities compensated any municipal officials or councillors affected by the no-payment of monthly contributions to the pension funds and medical aid funds.
“The responsibility to ensure this is avoided at all costs is with the respective municipal councils,” he said.
However, employees at Renosterberg Municipality instituted a lawsuit against the municipality, but it was dropped when there was follow-through.
Godongwana said criminal charges were laid against the former administrative and political leadership of Renosterberg Municipality.
“No arrest has been made and the criminal case is still under investigation by the law enforcement agencies as of May or June. The municipality has not received further communication from the law enforcement officers other than the charge sheet.”