The South African Local Authorities pension fund, known as Sala, has placed the responsibility on its former risk-benefits service provider, Prosperity Management Africa (PMA). Approximately ten former Mangaung employees have reportedly received no disability income since July 2024, despite a high court order directing PMA to resume payments.

Former Mangaung firefighter Hilton Nero is among those affected. He retired after sustaining an injury during an emergency operation and had received disability benefits for 17 years before the payments suddenly stopped.

“Sala pension fund paid me for 17 years, and they stopped paying me in August 2024. It has now been nearly two years, and I am selling everything I worked for to survive,” Nero said.

He has withdrawn socially, stopped interacting with members of his cycling club, and spends most of his time alone at home because of depression. Nero also complained about poor communication from the fund. Telephone calls allegedly went unanswered, while some beneficiaries were reportedly blocked on WhatsApp after repeatedly seeking information about their outstanding payments.

Another beneficiary, Mariette Oostenhuizen Strydom, previously raised similar concerns on Sala’s Facebook page. She was medically retired in 2008 and received monthly disability income consistently until delays began and the payments stopped completely in 2024. Beneficiaries were told that PMA had vacated its offices, Oostenhuizen Strydom alleged.

Responding to OFM News, Sala acknowledged the severe hardship experienced by beneficiaries but maintained that the disability income formed part of a separate insurance arrangement rather than the pension fund’s approved benefits.

The benefit was an unapproved risk benefit administered and underwritten by PMA or another insurer, depending on when each claim arose, principal officer Rewahla Mashaba said. It therefore did not fall within the approved benefits governed by the Pension Funds Act and Income Tax Act.

“The fund acknowledges the immense financial hardship and frustration experienced by the affected recipients. The fund has taken legal advice with a view to assisting them,” Mashaba said.

Sala obtained a high court order against PMA on 27 November 2024. Judge Adams ordered the company to pay R459,572.56 in arrears and continue making monthly payments on time.

The fund has tried to enforce the order, but its efforts have so far failed. Sala became aware of the payment crisis during August and September 2024 after affected beneficiaries contacted officials, Mashaba said.

When urgent proceedings were launched in November 2024, the fund had identified ten recipients whose payments had been suspended from July that year. PMA was never appointed to administer Sala’s general pension operations. It was a third-party service provider mandated between 2004 and June 2022 to arrange risk-benefit insurance for members, Mashaba added.

‘The sheriff found that PMA had left its registered premises’

PMA stopped paying disability benefits without informing Sala or the affected recipients and attributed the decision to its own financial difficulties. The fund demanded explanations in September 2024, issued letters of demand the following month, and instructed attorneys to recover the unpaid benefits before approaching the high court urgently. 

Sala subsequently issued warrants of execution against PMA’s movable and immovable assets. Both attempts failed because the sheriff found that PMA had left its registered premises, while its bank accounts contained insufficient funds.

“To date, no funds have been recovered from PMA. Enforcement has been frustrated by its physical absence and the lack of attachable assets,” Mashaba said.

The fund is now considering liquidation proceedings as its next recovery option. Sala maintains that it fulfilled its obligations by arranging risk-benefit insurance and paying all required premiums, while PMA was responsible for paying approved disability claims directly to members.

Sala said it would continue pursuing legal remedies, but it cannot say when or whether the beneficiaries will receive the income they have gone without for almost two years.

OFM News/Kekeletso Mosebetsi sm

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