INTRODUCTION

1. PRESENTATION TO THE PORTFOLIO COMMITTEE ON PUBLIC SERVICE AND ADMINISTRATION 1 June 2005INVESTIGATION INTO THE RE-EMPLOYMENT OF PERSONS RETIRED DUE TO ILL-HEALTH

2. INTRODUCTION • The investigation stems from reported incidents of the re-employment of former employees discharged due to ill-health. Initiated by the South African Police Service (SAPS). • Research covered the period: July 2000 - June 2002, and focused on the – • extent of gainful re-employment of persons retired due to ill-health in the Departments of Health, Education, Correctional Services and the SAPS; • management & cost implications for the GEPF; and • manner in which ill-health retirement processes are handled within Government departments.

3. OBJECTIVE & SCOPE • The objectives of the investigation were to – • assess the extent of re-employment amongst a sample of 950 public servants retired due to ill-health; • determine the nature of illnesses that led to retirement & the extent to which illnesses lend themselves to rehabilitation and re-employment; • ascertain the occupations of the sample of 950 persons prior to retirement and after; and • propose best practice approaches & amendments to the GEPF rules, in order to avoid the depletion of the Fund as a result of payments to persons who are gainfully employed after ill-health retirement.

4. METHODOLOGY • The following methodology was used: • Review of policies governing employment & employee benefits. • Benchmarking of other pension funds to improve the management of risk & processes related to ill-health retirement. • Analysis of sample of 950 persons with the highest incidence of retirement in DoH, DoE, DCS & SAPS. • Review of the GEPF pension files on capturing and evaluation of decision-making processes, the workplace, medical evaluations & the nature of illnesses. • Tracing of persons in the sample to determine their current employment status and establish dates of re-employment. • Actuarial assessment on findings to determine trends in re-employment, management of ill-health retirement & implications for the GEPF.

5. CURRENT ILL-HEALTH MANAGEMENT LEGAL FRAMEWORK • Important findings in relation to the Government Employees Pension Law, 1996, which governs the GEPF & ill-health retirement within the Public Service, include the following: • Nothing in the GEPF rules prevents an employee who is in receipt of an ill-health retirement benefit from becoming an active member of the Scheme again, should the employee be re-employed by the Government following ill-health retirement. • The GEPF has no control over membership of the Pension Fund for the purposes of ill-health retirement, nor over payment of the benefit. • If an employee has more than 10 years’ service and is discharged as a result of ill-health, the employee will become entitled to an ill-health pension. • Membership of the GEPF automatically qualifies an employee for ill-health retirement benefits. No medical examination is performed and no restrictions are placed on pre-existing conditions prior to qualification for ill-health retirement benefits.

6. FINDINGS: RE-EMPLOYMENT OF PERSONS RETIRED DUE TO ILL-HEALTH • 808 individuals (85,1% of the sample) were successfully traced. Of these, 22% (178 individuals) were re-employed. • Apart from one possible case no evidence of fraud or impropriety was found. • Patterns identified regarding re-employment included – • a significantly higher extent of re-employment amongst those retiring from the DCS & SAPS than from the DoE & the DoH; • those re-employed were generally found to be re-employed within a similar role when they were discharged; and • a greater proportion of those suffering from psychological conditions & musculoskeletal conditions were re-employed, as opposed to individuals suffering from other conditions. This may indicate inappropriate use of permanent ill-health retirement options.

7. FINDINGS: RE-EMPLOYMENT OF PERSONS RETIRED DUE TO ILL-HEALTH(continued) • Illnesses resulting in larger costs in terms of ill-health benefits include psychological & musculoskeletal conditions. • In many cases insufficient & inaccurate information was utilized during the decision-making process, resulting in inappropriate decisions & conclusions. • Indications of abuse of the system were also found, particularly in relation to issues such as - • retirement due to musculoskeletal conditions & mental & behavioural disorders (both of these are largely self-reported); • the alignment of ill-health retirement to length of service (10 years plus, when pension payments become more substantial); and • identification of the same group of medical professionals providing reports for particular conditions, with minimal content changes.

8. FINDINGS: MANAGEMENT OF ILL-HEALTH RETIREMENT PROCESS • Departments and regions did not follow a systematic and consistent approach to all ill-health retirement cases. • Limited consideration of alternative approaches. • Extensive delays in processing applications. • Inappropriate use of ill-health retirement provisions.

9. FINDINGS: AVAILABILITY AND SUFFICIENCY OF INFO, & DECISIONS • In many cases, limited information was available from the 231 GEPF pension files reviewed. Lack of detailed medical information to take a sound decision. • Discrepancies were found in health-related information between the GEPF pension files and departmental pension files in determining the validity of a claim. • Those involved in assessment lack the expertise for sound decision-making, while many employers appear to lack the expertise to evaluate recommendations. • It is apparent that decisions were frequently made on the basis of insufficient medical evidence, with no provision being made for definitions and identification criteria for concepts such as “impairment” and “disability”.

10. FINDINGS: TRENDS IN MANAGEMENT OF ILL-HEALTH RETIREMENT • No evidence was found of proactive approaches to ill-health management such as post-traumatic exposure debriefing & the use of an EAP. • High rates of ill-health retirement occurred at the DCS & SAPS due to psychological illness and high rates due to musculoskeletal conditions at the DoH & DoE.

11. RECOMMENDATIONS • The following departmental management processes require further attention: • Greater focus on workplace health & safety. • Improved management of stress. • Increased use of EAPs. • Greater use of redeployment & rehabilitation options. • The DPSA’s “Management Policy and Procedure on Incapacity Leave and Ill-health Retirement for Public Service Employees” should be implemented without delay. Progress already made should be noted. • Proposals are made i.r.o the rules and procedures of the GEPF. Progress to address the concerns identified has already been made (appointment of trustees, etc.)

12. CONCLUSION • The effective implementation of the framework must be the key focus going forward and a need exists to maximise controls to ensure consistency of application.