eThekwini Municipality to save R24 million due to Durban Pension Fund payment break

The eThekwini Municipality is set to realise significant financial relief following a decision by the Durban Pension Fund to grant the city a temporary break from employer contributions, a move expected to save at least R24 million in 2026.

Speaking on the matter, Deputy Chairperson for the Durban Pension Fund, Councillor Ntando Khuzwayo explained that the Durban Pension Fund is a closed fund, with membership limited to eThekwini Municipality employees who last joined in 2001 as it does not take new members. 

Khuzwayo explained that the fund has performed exceptionally well through global investments, and this strong performance has resulted in a surplus within the employer contribution reserve account.

As a result, he said the fund’s board took a decision in December to grant the municipality a payment holiday.

The City currently contributes approximately R2 million per month for active employees who remain members of the fund.

“The money that will be used to cover that (payment break) will be coming from that employee reserve account, which now has a surplus,” he explained.

Khuzwayo said the payment break will remain in place until December, when the decision will be reviewed. Over the course of the year, the municipality stands to save a substantial amount.

“So that’s a total of about R24 million that the municipality would have saved in 2026 due to this decision,” he said.

He described the development as a major financial boost for the city, particularly given its current fiscal pressures.

“It’s a major decision for the municipality because we need money. We need to save every cent that we have considering the challenges that we have financially and other projects that need money,” Khuzwayo said.

The funds saved will not be ring-fenced and may be redirected to other priorities at the discretion of the municipality's finance department.

“So that money will now be redirected to do other things. Finance can decide which other projects to involve,” he said, adding that the municipality could use the savings to improve service delivery. “We need to improve the effectiveness of models or the plans that we have in terms of service delivery.”

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