The Perils of Non-Compliance: Lessons from the Municipal Workers’ Retirement Fund Judgment

The recent judgment of Municipal Workers’ Retirement Fund v Mafube Local Municipality and Others highlights the severe consequences of failing to meet statutory obligations under the Pension Funds Act 24 of 1956 (“the PFA”). Delivered by Opperman J, the judgment emphasises the importance of compliance with section 13A of the Act.

At the heart of the case was the Mafube Local Municipality’s prolonged non-payment of retirement fund contributions deducted from its employees. Despite several court orders dating back to 2011, the municipality continued to default on its obligations, leaving the Municipal Workers’ Retirement Fund (“the Fund”) no choice but to seek judicial intervention once again. The quantum of the debt, amounting to a staggering R14,723,639.52 (including prescribed interest), was undisputed, covering arrears from May 2021 to January 2024.

Some of the key findings of the court were:

1. Personal Liability of Municipal Officers: One of the most significant aspects was the imposition of personal liability on the Municipal Manager, Chief Financial Officer, Executive Mayor, and Administrator under section 13A(8) and (9) of the PFA. The court emphasised that these individuals, as part of the municipality’s governing body, have a heightened obligation to ensure compliance with the rule of law and the Constitution. Their failure to do so rendered them personally liable for the arrears and associated interest.
2. Rejection of Defences: The court dismissed various defences raised by the Respondents, including arguments about defective joinder and their limited tenure in office. Opperman J clarified that liability under the PFA is continuous and cannot be evaded by claiming acting or temporary appointments. Furthermore, the municipality’s financial constraints did not absolve the officers from their statutory obligations.
3. Civil and criminal Implications: The non-payment of deducted retirement contributions was held to attract both civil and criminal liability under the PFA. The court directed the Registrar to forward the judgment to the Director of Public Prosecutions: Free State, Bloemfontein, signalling potential criminal proceedings against the Respondents.

This judgment reinforces the need for municipalities and their officers to prioritise compliance with the provisions of the Pension Funds Act. Proactive monitoring and accountability are essential to safeguard employees’ rights and uphold the rule of law. The court’s firm stance in this case sends a clear message that public officials will be held accountable for non-compliance.

Mzwakhe Poswa

Associate | Attorney

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