The Independent Municipal and Allied Trade Union (IMATU) is frustrated to learn that less than two months after signing the Local Government Salary and Wage Collective Agreement, the South African Local Government Association (SALGA) is preparing to renege on its commitments.

Section 9.3 of the Salary and Wage Collective Agreement clearly states, “With effect from 1 July 2012, the monthly employer contribution towards Defined Contribution Retirement Funds will be eighteen percent (18%) of the monthly basic salary of all employees”. This means that from 1 July 2012, all Local Government employees must receive an employer contribution of 18% of their monthly basic salary and employees who received a lower contribution prior to 1 July 2012 should have their contributions increased to 18%.

SALGA now claims that it was never their intention to elevate lower contribution rates to 18% despite having signed an agreement which clearly provides that all employees must receive an employer contribution rate to Pension Funds of 18%.

“In a recent memorandum to municipalities, SALGA appears to have advised municipalities to retain monthly employer contributions towards Defined Contribution Pension Funds at the current rates, if they are below 18%, and that it has allegedly never been their intention to elevate those lower rates to 18%,” explained IMATU Deputy General Secretary, Craig Adams.

IMATU has written to SALGA advising them that their statement to municipalities in this respect is in direct conflict with clause 9.2 of the Salary and Wage Collective Agreement which clearly provides that such contribution rates shall be 18%.

“We have given the Employer until 21 September 2012 to confirm that all employer contribution rates to Defined Contribution Pension Funds will be set at 18% and that contribution rates that are currently lower than 18% will in fact be increased to 18% with effect from 1 July 2012. In the event that SALGA does not respond to our letter and / or confirms that it will stick to its interpretation as set out in its circular, it will be treated as a breach of the Salary and Wage Collective Agreement and IMATU will forthwith invoke the dispute resolution mechanisms contained in the Agreement,” stated Adams.

The Salary and Wage Collective Agreement also provides that any employee who currently receives a higher monthly contribution rate (higher than 18%) will retain such higher rate.