Prepared by the Chief of Human Resources, DOD 13 November 2007

1. Briefing to the Portfolio Committee on Defence on the Mobility/Exit Mechanism for Members of the SA National Defence Force and the Employee Initiated Severance Package for Public Service Act Personnel Prepared by the Chief of Human Resources, DOD 13 November 2007

2. Aim • To brief the Portfolio Committee on Defence on the implementation of the Mobility/Exit Mechanism (MEM) for members of the SA National Defence Force and the Employee Initiated Severance Package (EISP) for Public Service Act Personnel (PSAP)

3. Scope • Exit Mechanisms • Implementation of the MEM for SANDF members and EISP for PSAP • Analysis of the Impact of Implementation of the MEM and EISP • Conclusion

4. Exit Mechanisms: MEM • Legal basis • GEPF Rule 14.8 and 20 amended • Approved by National Treasury • Minister of Defence approved 5 Jul 05 (ito Section 55 of Defence Act [42 of 2002]) (Introduced wef 12 July 2005) • Intent of MEM • Should lead to a tangible rightsizing progress • Execute through realistic succession planning • Guard against the exodus of expertise/scarce skills • Advise members iro career progress as informed by the Transformation and Restructuring imperatives • Choice to accept/reject offer – MEM is voluntary

5. Exit Mechanisms: MEM (cont) • Guidelines for Succession Planning iro MEM • Are functional groups/musterings constrained by critical shortages • Status of ETD and learner throughput • Maintenance of expertise • Contribution to rightsizing (MTEF & longer) • Contribution to race-rank distribution correction • “Old” Service System contract expiries and renewal justified • Succession planning: • Role of Services and Divisions

6. Exit Mechanisms: EISP • Minister of PSA determination introduced the EISP wef 1 Jan 06 • Ito Section 3(3)(c), Public Service Act, 1994 • DOD introduced the EISP wef 31 May 06 • EISP Benefits Structure • Pension beenfits ito the Gov Employees Pension Law, 1996 • Departmental benefits ito the Implementation Measures • EISP Application • Employees initiate their separation via the EISP

7. MEM Departmental Benefits Pension Benefits ito GEPF EXIT PAY: 2 weeks for every full year service, but a minimum of R 15 000.00 payable LEAVE:Payment of leave credit Less than 10 years service and/or younger than 55 years of age 10 years pensionable service and 55 years or older RESETTLEMENT: Actual expenses MEDICAL PROVISION: Plus 10 years service, option to buy into RFMCF up to age 60, and eligible for medical service according to SAHMS provisions PRO-RATA SERVICE BONUS GRATUITY & ANNUITY - NO SCALING DOWN OF PENSION BENEFIT RULE 14.3.3(b) - WITHOUT AN ADDITION OF PENSIONABLE SERVICE RULE 14.2.4(b) CONTRACTUAL OBLIGATIONS: Released ACTUARIAL INTEREST RULE 14.4.2 STATE GUARANTEE: Third party debts recovered from exit pay OFFICIAL HOUSING: One month’s notice SUBSIDISED MOTOR VEHICLE SCHEMES RESKILLING: Maximum of R13 000.00 for reskilling, training for employment opportunities, and entrepreneurial skills MEM for SANDF Members: Benefit Structure

8. EISP Departmental Benefits EXIT PAY: 2 weeks for every full year service, but a minimum of R 15 000.00 payable Pension Benefits ito GEPF LEAVE:Payment of leave credit RESETTLEMENT: Actual expenses, 55 yrs & older compensated according to PSCBC Resolution 3 of 99 & Departmental Policies Less than 10 years service and/or younger than 55 years of age 10 years pensionable service and 55 years or older MEDICAL: 55 yrs & older qualify for post-retirement medical assistance: Less 10 yrs equal 12 times employer contribution 10 to 15 yrs equal to 36 times employer contribution 15 yrs plus 2/3rd employer contribution per month CONTRACTUAL OBLIGATIONS: Released GRATUITY & ANNUITY - NO SCALING DOWN OF PENSION BENEFIT RULE 14.3.3(b) - WITHOUT AN ADDITION OF PENSIONABLE SERVICE RULE 14.2.4(b) PRO-RATA SERVICE BONUS STATE GUARANTEE: Third party debts recovered from exit pay ACTUARIAL INTEREST RULE 14.4.2 OFFICIAL HOUSING: One month notice SUBSIDISED MOTOR VEHICLE SCHEMES RESKILLING: Maximum of R13 000.00 for reskilling, training for employment opportunities, and entrepreneurial skills EISP for PSAP Employees: Benefit Structure

9. MEM as at 07 November 2007: Approved by Minister of Defence Race and Gender

10. EISP as at 07 November 2007: Approved by Minister of Defence Race and Gender

11. MEM as at 07 November 2007: Approved by Minister of Defence Age Group

12. EISP as at 07 November 2007: Approved by Minister of Defence Age Group

13. MEM AND EISP as at 07 November 2007: Approved by Minister of Defence Fin year and Budget Holder

14. Exit per reason other than Exit Mechanism Note: FY 2005/06: MEM/EISP = 12,8% of total exits FY 2006/07: MEM/EISP = 18,7% of total exits

15. Conclusion • Steady results are being achieved on stated objectives eg representivity and age profiles with the implementation of the MEM • 37,6% of all exits are in the rank group Col, Lt Col, WO1 and WO2 • 26,9% of all exits are white males in the rank group Col, Lt Col, WO1 and WO2 • 71,2% of all exits are White • Difficult to forecast the exact rightsizing results as MEM/EISP are voluntary • The tempo of implementation for both the MEM and EISP determines their success in the DOD • Continuous (monthly) monitoring of progress • Continued emphasis on succession planning efforts ito the MEM application

16. DISCUSSION/QUESTIONS