Pension fund payments at heart of Blue Crane court clash

• Published date: 07 May 2024
• Publication title: Herald, The (Port Elizabeth, South Africa)

Millions of rand of public money and the management of a municipal pension fund scheme are at the centre of an impending clash in the Makhanda high court

The matter involving the Blue Crane Route municipality and the Municipal Workers Retirement Fund came to a head last week when the sheriff seized office furniture and a fleet of nine vehicles.

Thursday’s seizure relates to the fund’s claim of more than R33m — including R3.8m capital and R30m in interest — from the municipality.

But the municipality has asked the court to compel the fund to return the assets, and to confirm it owes only R12.2m, including interest.

The Blue Crane Route municipality includes KwaNojoli (Somerset East), Pearston, Cookhouse and four other small towns in the Sarah Baartman district.

Municipal manager Mzwa-ndile Nini said the matter dated between 2007 and 2013.

“In that period, the [retirement] fund advised the municipality of an increased amount to be paid.

“The municipality refused to make such a payment and continued to make ordinary payments on the grounds that the fund rules required consent from the [municipal] employer before deductions could be increased. This was not done and that was why the municipality did not adhere to payment of R3.8m plus interest.”

Nini said on receipt of court papers from the fund in 2019, the municipality appointed an attorney who failed to file a notice to defend, and a default judgment was given.

Another firm was appoin-ted and an application to rescind was lodged but was dismissed by both the high court and appeal court.

“The municipality throughout the proceedings negotiated with the fund.

“The real problem was the exorbitant and unreasonable interest rate at which the fund required payment.

“Currently, the fund requires R30m interest despite the capital only being R3.8m, so the interest is more than 10 times the capital amount.

“This is utterly unreasonable and councillors have a constitutional duty to protect the municipality, its assets and employees against unreasonable claims.”

Nini said the matter was discussed in various council meetings and, on April 30, “councillors voted to pay R3.8m capital and R8.4m in interest as calculated...