Organised labour is threatening industrial action if the South African Local Government Association (Salga) goes ahead with the amalgamation of all municipal pension funds before the introduction of the new Pension Funds Act.
The Congress of South African Trade Unions (Cosatu) is infuriated by the way in which Salga has attempted to force municipal employees to join the mega fund, even before it was registered with the Financial Services Board (FSB).
At the Institute of Retirement Funds' conference this week, the move came under fire from Cosatu delegates, as well as the guest speaker, Blade Nzamande, the general secretary of the South African Communist Party and the chairperson of the Financial Sector Campaign Coalition.
Jan Mahlangu, Cosatu's co-ordinator of retirement funds, says the South African Local Government Bargaining Council had agreed to a moratorium on forcing local government employees to join a single medical scheme or retirement fund.
Cosatu had been surprised by an instruction from Salga in June this year that all municipalities must join the new fund, which at the time had not been registered with the FSB in terms of the Pension Funds Act.
He says other irregularities include the fact that Salga employees, who are not members of the new fund, have been made trustees of the fund.
Mahlangu says at least 50 percent of the fund's trustees should be elected by members.
He says Salga is using taxpayers' money to fight off court challenges to the formation of the fund.
Cosatu wants the formation of the mega fund to be part of the overall reform of the pension fund regime. Cosatu is not opposed to a consolidated fund, but believes that it should be done in terms of a reformed retirement industry.
The labour federation is also concerned about how a newly created retirement fund administrator, Akani Retirement Fund Administrators, was mysteriously appointed as the administrator of the mega-fund.
Cosatu wants to know what procedure was followed in appointing Akani and who are the shareholders and directors of the administrator.