South African Local Authorities Pension Fund v Msunduzi Municipality

The South African Local Authorities Pension Fund instituted action against Msunduzi Municipality in the KwaZulu-Natal High Court claiming approximately R324 000 in alleged arrear employer pension contributions. The Fund relied on an alleged amendment to its rules, purportedly adopted by its Board of Trustees in August 2003, which increased employer contributions from 18.07% to 20.78% of members’ pensionable salary. The Fund alleged that this amendment had been approved by the Registrar of Pension Funds in July 2006. The Municipality disputed the validity of the rule amendment. At trial, the Fund led evidence from its principal officer but failed to clearly establish when a valid resolution was adopted, whether it complied with section 12 of the Pension Funds Act 24 of 1956, or whether the Registrar’s approval related to a validly adopted resolution. The High Court granted absolution from the instance at the close of the Fund’s case, and the Fund appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, including the costs of two counsel where employed.

The case affirms that pension funds must strictly comply with section 12 of the Pension Funds Act when amending rules and that they bear the onus of proving such compliance when enforcing amended rules. It clarifies that a party seeking to rely on an administrative approval must prove its validity and cannot simply rely on the principle that administrative acts stand until set aside. The judgment reinforces the evidentiary threshold required to survive absolution from the instance and has been influential in similar litigation involving the same pension fund and municipalities.