PRETORIA – Finance Minister Enoch Godongwana has sounded the alarm over what he describes as a growing crisis within South Africa’s municipalities, revealing that more than R1.7 billion deducted from municipal workers’ salaries for pension contributions has allegedly never reached the intended pension funds.

Speaking on the matter, Godongwana said the funds are being deducted from employees’ monthly salaries, yet many municipalities are failing to transfer the money to pension administrators, leaving thousands of workers at risk of losing retirement benefits they have already paid for.

The minister’s remarks have intensified scrutiny of the financial governance of municipalities across the country, many of which are already struggling with mounting debt, service delivery failures and governance challenges.

Workers Could Face Retirement Shock

The revelation means some municipal employees may believe their pension contributions are safely accumulating for retirement, only to discover years later that the money was never paid into their retirement funds.

The issue could have severe consequences for workers nearing retirement, particularly those who may have limited time to recover unpaid contributions.

Labour unions have repeatedly warned that municipalities withholding pension deductions while failing to pay them over to retirement funds amounts to a serious breach of trust and places employees’ financial futures in jeopardy.

Government Under Pressure to Act

Godongwana’s disclosure is expected to increase pressure on National Treasury, the Department of Cooperative Governance and provincial governments to intervene against municipalities that fail to meet their financial obligations.

Municipalities are legally required to transfer deductions made from employees’ salaries to the relevant pension funds within prescribed timeframes.

Failure to do so may expose municipalities to legal action, financial penalties and possible investigations into financial misconduct.

Governance Crisis Deepens

The latest revelation comes as numerous municipalities continue to battle financial instability, with several owing billions to Eskom, water boards and other creditors while struggling to maintain basic services.

Financial experts have warned that weak governance, poor financial controls and alleged mismanagement continue to undermine local government finances.

Godongwana’s comments are likely to fuel renewed calls for stricter oversight and accountability to ensure employee deductions are protected and municipal finances are managed responsibly.

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