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Presentation to the Portfolio Committee of Labour 19 March 2010 Unemployment Insurance Fund. Structure of Presentation. Introduction/Objectives of the Presentation Key issues ( Achievements and Challenges) 2.1 Governance 2.2 Financial Performance 2.3 Operational Performance
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Presentation to the Portfolio Committee of Labour 19 March 2010 Unemployment Insurance Fund
Structure of Presentation • Introduction/Objectives of the Presentation • Key issues ( Achievements and Challenges) • 2.1 Governance • 2.2 Financial Performance • 2.3 Operational Performance • 2.4 Response to current economic meltdown • 2.5 Improvements in benefits • 3. Strategic objectives 2009/10 to 2012/13 • 4. Conclusion
Governance • The year 2008/9 was another success in obtaining an unqualified audit opinion/report from the Office of the Auditor General. This is the fourth time in succession from 2005/6. Attention is now accorded to improve service delivery to our broader clients. • Compliance to legislations and policies has been the cornerstone of our operations and we continue to improve. • We have worked closely with the Executive Authority and the UIF Board in addressing the strategic intent and challenges. We have also welcome the new Board in this current year and the good work continues. • Despite the economic turmoil, the Fund is able to weather the storm and pay close attention to the service delivery complaints observed. • Actuarial valuations by end of March 2009 indicate that the Fund is in a sound financial position.
Financial Performance • Despite the economic meltdown, the Fund managed to collect R 10.3 billion compared to R 9.1 billion ( 2007/8) • Total value of assets increased from R 27.8 billion (2007/8) to R 37 billion • Investment revenue increased from R 2.1 billion (2007/8) to R 3.4 billion • Surplus increased from R 6.8 billion (2007/8) to R9.2 billion
Operational Performance • The Fund has 1.2 million employers ( commercial, domestic and taxi) registered on the system. Taxi sector has been slow in registering with the Fund. Classification of employers
Operational Performance • The Fund has 7.6 million registered employees ( commercial, domestic and taxi). Classification of employees
Operational Performance • The rapid deterioration in global financial markets and an increase in unemployment in South Africa saw a growing demand for unemployment benefits. The Fund paid an amount of R 3.8 billion in benefits against the R 2.9 billion of last year • For the first nine months of 2009/10, the Fund has paid R4.4 billion (unaudited) in benefits. • The Fund received 627,244 claims which is an increase of almost 100 000 more claims than in 2008/2009. A total of 610,736 of these claims were approved during this period reflecting an approval rate of 97%. • The number of claims for the first nine months of 2009/10 is 679 115 received and 660 529 were approved. The approval rate remains 97%
Response to economic meltdown Training of the unemployed • The Fund is working with DoL and SETAs on a pilot project to train unemployed beneficiaries. This pilot project is up and running in Gauteng South and Gauteng North is busy finalising its project plan. R 40 million set aside for this project Training Layoffs • The Fund contributed R 1.2 billion to the project dealing with the training of the layoffs. A training layoff scheme is aimed at companies that are in distress due to economic situation
Improvements in benefits • Internal processes have started to amend the legislation ( Unemployment Insurance Act) to improve the benefits. It is envisaged that the internal process will be finalized before year end and the next financial year would be dedicated for NEDLAC and parliamentary processes. • The intention is to increase the income replacement rate and extend the benefit duration from 238 to 365 days. Actuaries are busy evaluating these options for financial viability.
STRATEGIC GOAL 1RE-INTEGRATE UNEMPLOYED WORKERS BACK INTO LABOUR MARKET
Conclusion • The Fund has appreciated the tenable successes and acknowledged some of the challenges facing the organisation and we continue in our strides to address these challenges. • The current economic recession pose a service delivery challenge to the Fund in terms of claims turnaround time. We are putting capacity to address the demand. Created a balance of models to cater for both good and bad economic conditions. • The Fund has enough reserves to fight the current storm of high retrenchments.
