The Municipal Employees Pension Fund (MEPF) and Akani Retirement Fund Administrators have launched an urgent bid in the North Gauteng High Court, asking it to bar municipalities from implementing the collective agreement entered between employers and several unions.
The agreement was entered into in September last year between the South African Local Government Association (Salga), South African Municipal Workers Union (Samwu) and Independent Municipal & Allied Trade Union (Imatu).
The trade union parties (Imatu and Samwu) represent 247 502 of the employees concerned, while Salga represents 257 employers who employ 248 816 of the employees in local government.
The MEPF is a pension fund with more than 30 000 members who are employed in 112 municipalities.
The pension fund said in its affidavit that the collective agreement “purports” to establish a procedure under which certain funds (including the MEPF) will be required to apply to the South African Local Government Bargaining Council for accreditation.
Another feature of the collective agreement that MEPF and Akani took issue with is the provision that new employees will be required to join only accredited defined contribution retirement funds.
The agreement also requires municipalities to contribute as participating employers to accredited funds only and that an existing retirement fund that is not accredited will be given notice of termination by participating employers, who are bound by the agreement.
The MEPF listed several concerns with the stipulations in the accreditation process. These include that the bargaining council would have the right to oversee and control a pension fund’s investment and to receive the fund’s confidential internal financial and governance information.
The MEPF told the court it has R23.4-billion in assets, adding that the collective agreement was unconstitutional and would spell doom for it.
“The effect of the collective agreement is that existing pension funds in the sector that decline to be accredited will have membership of employees in the sector terminated and those members will be required to join an accredited fund. In other words, non-accreditation will result in a fund losing all membership in the sector,” reads the affidavit deposed by Akani boss Zamani Letjane.
Akani administers the MEPF.
“For funds such as the MEPF, which operate almost exclusively in the sector, this would mean ceasing to exist as a pension fund,” Letjane said.
The collective agreement, which we have seen, has an implementation date of July 22 2022 and lapses on June 30 2027.
Letjane painted a picture for the court of the consequences for Akani should the collective agreement be allowed to stand.
“Akani operates largely in the local government sphere. By far its largest fund under administration is the MEPF. Akani has focused its offering on the local government sphere since Akani’s founding in 2001. The MEPF has more than 30 000 members, where Akani’s other funds combined have approximately 5 500 members.”
Akani last year lost the Chemical Industries National Provident Fund after not seeing eye to eye with the fund’s board of trustees with allegations and counter-allegations of incompetence and corruption.
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