Dear valued member,

The Supreme Court of Appeal delivered a judgment on 21 August in the case of SALGA v Municipal Workers Retirement Fund & Others, which has been ongoing since 2023. The Fund is carefully reviewing the judgment and will provide further insights once this process is complete.

The core of the court order is as follows:
“The Retirement Fund Collective Agreement signed on 15 September 2021 is reviewed and set aside on account of illegality.”

This means that the anticipated rationalisation exercise under the collective agreement, which would have allowed for freedom of association, enabling existing members of different retirement funds to move to a retirement fund of their choice, will not proceed.

This is not the outcome that NFMW was expecting and would have wanted, as many municipal employees had expressed interest in joining NFMW once the window period opened. Such a transition would have been beneficial to the municipal employees who would have joined NFMW as members, with NFMW offering those members a well-governed, cost-effective, and member-centred fund, while strengthening NFMW’s ability to deliver sustainable value at scale. Unfortunately, the disadvantaged party in this outcome are the municipal employees who were denied the opportunity to join a fund such as NFMW with a strong value proposition.

Despite this setback, the Fund continues to support and firmly believes in the constitutional right of freedom of association. We also believe that retirement funds must provide a fundamental purpose - value. Members should be given the freedom to choose retirement funds that are cost-effectively managed and whose management demonstrates sound governance and responsible investing to deliver desirable retirement outcomes. We remain hopeful that, in time, the right outcome will prevail and members will be granted the freedom to choose the retirement fund that best serves their needs.

At this stage, it is not clear how the South African Local Government Bargaining Council intends to take the matter forward. It remains possible that the case could be escalated to the Constitutional Court, depending on the legal advice that may be obtained/received by the Bargaining Council and other interested parties.

As always, we will continue to keep you, our stakeholders, informed of developments on the matter as the matter evolves, as well as any other Fund or industry-related developments.

In the meantime, please be assured that this development does not change the Fund’s commitment to its vision and mission, dedication to delivering value, safeguarding members’ retirement outcomes, and supporting employers remains unchanged.

Sincerely,
Dr Leslie Ndawana
Principal Executive Officer