CONFIDENTIAL

1. CONFIDENTIAL South African Post Office SOC Limited Amendment Bill, 2013 Department of CommunicationsPresentation to the PCC06 August 2013 Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

2. CONFIDENTIAL Presentation Outline • Introduction/ Background • Problem Statement • Objective • Provisions of the Bill • Process followed • Departments/Stakeholders consulted • Conclusion Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

3. CONFIDENTIAL Introduction/Background • Post Office Pension Fund was established on 1 October 1991 in terms of section 9 of the Post and Telecommunication-Related Matters Act,1958(Act No 44 of 1958) (PTMA),and renamed Post Office Retirement Fund (PORF) in 2005 • Post Office Pension Fund is a juristic person managed by a Board of Trustees as separate legal entity from the South African Post Office Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

4. CONFIDENTIAL Problem Statement • Ms Ngewu applied to the Constitutional Court for relief that would allow her to obtain immediate payment of her share of the pension interest benefit from her former spouse’s pension fund which was awarded to her following their divorce • The Post and Telecommunication-Related matters Act, 1958 currently does not make provision for the “clean break” principle upon divorce, this principle allows spouses to access their share of the pension benefit on divorce or dissolution of a customary marriage Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

5. CONFIDENTIAL Problem Statement • The Constitutional Court found the Post and Telecommunications-Related matters to be inconsistent with section 9(1) of the Constitution and invalid, as it does not provide for the “clean break” principle. Section 9(1) “Everyone is equal before the law and has the right to equal protection and benefit of the law.” • The Constitutional Court suspended the order for eight months from the date of the order, and the Minister as the second respondent is expected to remedy the Constitutional defect within that time by 11 November 2013 Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

6. CONFIDENTIAL Objective • To update and transfer pension related provisions of the South African Post Office from Post and Telecommunication-Related Matters Act to the South African Post Office SOC Limited Act • To enable the payment of a pension interest to a former spouse of a member on divorce or the dissolution of a customary marriage • To improve governance provisions between the Boards of the Post Office and Postbank in the context of the holding company and subsidiary relationship Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

7. CONFIDENTIAL Objective • To strengthen governance relationship between SAPO and Postbank as its subsidiary in ensuring that all the members of the Postbank Board are fit and proper persons as contemplated in the Banks Act Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

8. CONFIDENTIAL Provisions of the Bill The Amendment Bill is divided into 7 clauses as follows: • Clause 1:The clause seeks to insert new definitions for ‘‘child’’, ‘‘Post Office Retirement Fund’’ and ‘‘rules’’ • Clause 2: Seeks to substitute the word ‘Post Office Act’ with the Post and Telecommunication-related Matters Act wherever it appears in the Act • Clause 3: Seeks to amend section 8(2)(a) by removing requirement that the Managing Director of the Postbank to be one of the members of the Post Office Board by virtue of his or her office Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

9. CONFIDENTIAL Provisions of the Bill • The clause further seeks to amend section 8(5) by removing the requirement that when the Board recommends persons for appointment to the Board of the Postbank, must nominate non executive members of the Board of the Post Office • The amendment is required since the appointment criteria and the manner for members of the Boards of the South African Post Office and Postbank respectively are different • Clause 3 further seeks to amend section 8(6) by making it clear that any non-executive members of the Board are appointed to the Board of the Postbank such members are accountable to the Board of the Postbank in respect of their functions performed as Board members of the Postbank Board Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

10. CONFIDENTIAL Provisions of the Bill • Clause 4: Seeks to amend section 11(4)(c) to ensure that all members of the Board must be fit and proper persons to manage the affairs of the Post Office in its capacity of a controlling company of the Bank, as contemplated in section 44 of the Banks Act,1990(Act No 94 of 1990) • Clause 5: This clause seeks to insert the following provisions that are necessary to ensure the continued existence of the PORF and matters relevant thereto: • Clause 5.1: Continues existence of the Post Office. The clause seeks to provide for the continued existence of the PORF. This clause is necessary to ensure the continued existence despite repeal of section 9 of the said Act by the Bill Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

11. CONFIDENTIAL Provisions of the Bill • Clause 5.2: Rules of the Fund. The clause read with the definition of the Rules seek to provide for the continued existence of the Statutes or the Rules of the PORF made under section 10 of the PTMA despite repeal of the section by the Bill • It further provides for the control and management of the Fund, the conditions for admission to and termination of membership, the amount and nature of contributions by members and contributions and other payments by the Post Office, the benefits due to members and other beneficiaries, and the manner in which the Rules may be amended Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

12. CONFIDENTIAL Provisions of the Bill • Clause 5.3: Actuarial Valuation of the Fund. This clause is necessary to ensure that the Financial sustainability and feasibility of the PORF is adequately and properly measured and monitored. It directs how the required funding level is maintained • Clause 5.4: Prohibition against cession, encumbrance or attachment of the Pension Fund. This clause is similar to section 37D of the Pension Funds Act and is necessary to preserve, protect and safeguard the benefits of the members of the PORF during their membership and when they exit the Fund. It also allows the PORF to make certain lawful and regular deduction from benefits of members, when such members cease to be members or when they exit the Fund. Further enables the PORF to amend its Rules to give effect to the “clean break” principle Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

13. CONFIDENTIAL Provisions of the Bill • Clause 5.5: Insolvency of a beneficiary. The clause seeks to protect, preserve and safeguard the benefits of members of the PORF against claims of creditors. The provision ensures that pension benefit may not be attached if a beneficiary becomes insolvent, which benefit revives after rehabilitation, the sequestration being set aside or claims of creditors being satisfied Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

14. CONFIDENTIAL Provisions of the Bill • Clause 5.6: Registration of the Fund under Pension Funds Act. The clause is based on section 10D of the PTMA and is necessary to enable the PORF to convert to a private pension fund by registering as such under Pension Funds Act, subject to approval of the Minister of Communications after consultation with the Minster of Finance • This provision is required since it is foreseen that the statutory funds may in future be required to become private funds in terms of the Pension Funds Act Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

15. CONFIDENTIAL Provisions of the Bill • Clause 5.7: Membership of employees of subsidiary companies. This clause enables members of the Post Office Retirement Fund to remain members despite being transferred or seconded to a subsidiary company of the Post Office • It further allows employees of the subsidiary to become members of the Fund if the subsidiary company does not make use of another pension fund Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

16. CONFIDENTIAL Provisions of the Bill • Clause 5.8: Taxation: This clause ensures that the rights and benefits contemplated in subsection 8(4) of the PTMA in respect of tax continue to exist despite the repeal of that section by the Bill. The tax rights and benefits apply to officers and employees of the then Department of Post and Telecommunications (now Communications) that were transferred to the Post Office and must continue until all such officers and employees have exited the PORF • Clause 6: This clause provides for the repeal of the law mentioned in schedule 1 of the Act • Clause 7: This clause the short title: the South African Post Office SOC Ltd Amendment Act, 2013 Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

17. CONFIDENTIAL Departments/stakeholders consulted • Department of Justice and Constitutional Development • Department of Finance • South African Post Office • Post Office Retirement Fund • Telkom South Africa • Constitutional Court • Civil Society by gazetting the Bill for public comments Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

18. CONFIDENTIAL Process • The Bill was developed in consultation with the South Africa Post Office SOC Limited, Postbank Division of the South Africa Post Office SOC Ltd, National Treasury, South African Reserve Bank (the Office of the Registrar of Banks and the Office for Banks), and further approved by the following: the Economic Sectors & Employment Cluster on 17 April 2013, Cabinet Committee on 18 June 2013 and full Cabinet on 26 June 2013 Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

19. CONFIDENTIAL Conclusion • The Bill allows for the update and transfer of pension-related provisions of the South African Post Office from the Post and Telecommunication-related Matters Act to the South African Post Office SOC Ltd Act • The updating of the Bill includes the inclusion of the “clean break” principle as a result a recent court decision of Ngewu vs PORF where the court found that the exclusion of this principle from the PTMA is unconstitutional and invalid which must be rectified Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

20. CONFIDENTIAL THE END I THANK YOU Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development