The South African Municipal Workers’ Union (Samwu) National Provident Fund has been instructed by the deputy Pension Funds Adjudicator, Muvhango Lukhaimane, to allow its members to transfer to other municipal funds.
Lukhaimane’s instruction follows 66 complaints to her office that the provident fund was blocking the transfer of members.
It is virtually a class action by the members, most of whom are employed by the Nelson Mandela Bay Metropolitan Authority.
The Samwu fund claimed it was entitled to block the transfer because of a collective agreement concluded in the South African Local Government Bargaining Council that imposed a moratorium on inter-retirement fund transfers pending negotiations on the future structure of municipal pension funds. The moratorium has been in place for more than 12 years.
Reasons for wanting to move include:
* Maladministration surrounding an R800 000 unaccounted payment. On this issue the provident fund responded that the money had been paid to a trustee by the Momentum Group, which in turn had refunded the fund for the amount and the trustee had been removed.
* Benefits not accumulating interest.
* Long waiting periods before the payment of benefits. The Samwu fund claimed that this claim had no basis and that members were paid as and when they submitted proper documentation.
* Investment under-performance. The Samwu fund claimed that the complainants had not provided evidence to support their contention.
The rules of the fund state that a member may not withdraw while in service of the employer; and membership of the fund will cease on the member leaving the employer unless the member is entitled to a retirement benefit.
Lukhaimane says that the members are not entitled to withdraw in terms of the rules while they remain in the service. This, she says, raises constitutional issues involving the freedom of association.
However, she says, the appropriate fund rule is the one that deals with transfers. The rule does not prohibit the transfer of its members to another fund.
Lukhaimane says the bargaining council agreement is inconsistent with the rules of the provident fund.
She says the question is whether the bargaining council agreement supersedes the rules of the fund.
She cites various High Court judgments where it was held that trustees are bound by the rules of the fund.
As a consequence, the bargaining council agreement is contrary to the rules of the fund in so far as it prevents transfers and is unenforcable, the deputy adjudicator says in her determination.
Lukhaimane has given the fund eight weeks to process the transfers.
She dismissed an argument from the provident fund that she did not have jurisdiction over it because the matter was under discussion at the municipal bargaining council.