NSF Dispensation Briefing to the Joint Standing Committee on Defence 4 May 2007

1. NSF Dispensation Briefing to the Joint Standing Committee on Defence 4 May 2007

2. Agenda • Background • Addressing the queries of the Committee • Requirements for NSF recognition • Duration for processing an application • Communication between HR Military office, policy implementation office, military service corps, Treasury • Are there proposals within Treasury for a more feasible and sensitive pension scheme for the NSF members about to exit the SANDF • What ideas / proposals are there for tax reduction for pensioned military personnel • Statistical Overview • Discussion and Questions

3. Background • The intention of the NSF pensiondispensation is • To address the pension disparity between former non-statutory and former statutory forces as far as possible • Definition of Non-Statutory Force member • Former Umkhonto we Sizwe (MK) or Azanian People’s Liberation Army (APLA) members • Whose names appear on the certified personnel register or personnel list • Who entered into employment agreement with any Government Department before the cut off date as applicable for respective employer departments

4. Background • NSF Service is defined as the period between the date on which NSF member joined the respective former force as reflected in the service certificate and the date of taking up employment or entering into agreement with Government Department • Service is only recognised for the period after the member attained the age of sixteen years • NSF service period cannot overlap with contributing service periods • NSF Service is recognised as additional service within the GEPF so that the broader benefit structure of the GEPF is enhanced by NSF service

5. Approval and Legislative Amendment Process • PSCBC Resolution 8/98 • Address pension disparities which arose from previous discriminatory pension policies (R376m cap on NSF) • Cabinet Approval (9/2000 at cost of R501m) • Multiple age categories • 7.5% member contribution • PSCBC Resolution 12/2002 (R501m) • Portfolio Committee on Finance (2003) • Alternate scenarios tested • Final dispensation approved in 2003

6. Approval and Legislative Amendment Process • Government Employees Pension Law Amendment Bill 4 of 2003 (National Assembly 11 September 2003) • Special Pensions Amendment Bill of 2003(National Assembly 11 September 2003) • GEPF Rule amendments and funding were negotiated as part of PSCBC resolution 7/2003 (R768m) • Amendment of the Income Tax Act (Tax freeservice before 1998)

7. Principles/Conditions of Recognition • Provides for recognition of • Service of less than 10 years to the extend of 50% • Service of 10 years or more to full extent • NSF members have the option to choose either Special Pension (S) or NSF Pension dispensation (within GEPF) – a member cannot have benefits from both dispensations • Adjustment of Benefits where Demobilisation benefits (D) was previously paid (Demobilisation Act 99/1996) • A requirement for a member’s contribution (M) at 5%. • A member has the option to pay S, D, and M • As a lump sum • As a series of payments overtime or not pay any one or all of those debts • The effect of non-payment is that the NSF service is adjusted downwards

8. Requirements for NSF recognition • Covered in Background

9. Duration for processing an Application Undelivered Mail Error Documents • The processing of an application at the GEPF takes approximately 60 days after the submission of the documentation by the relevant employer department • Closing date for applications originally September 2005, then extended to 31 March 2007. • Now extended to 31 March 2008

10. Form of Communication • DPSA Circular to the Heads of all National and Provincial Departments and Administrations - 13/01/2005, 24/06/2005 • GEPF reminders send June, November 2005, March 2007 • Road Shows (DoD/GEPF) - Distributions of application forms to DoD members (2004) • Monthly meetings (Senior DoD/GEPF Management Officials) • Weekly operational meetings (DoD/GEPF ongoing) • Daily correspondence via letters, telephone enquiries and personal visits (GEPF Operational) • Meetings on request by Secretary of Defence/DG: National Treasury/GEPF • GEPF Circulars to all Employer Departments – Extension of cut-off date (from 30/09/2005 - 31/03/2007) – currently drafting new extension communication (31 March 2008) • Live Information Portal between DoD and GEPF with summary statistics

11. Policy Queries • Are there proposals within Treasury for a more feasible and sensitive pension scheme for the NSF members about to exit the SANDF? • What ideas / proposals are there for tax reduction for pensioned military personnel? In respect of such proposals, the GEPF is in the hands of the policy makers In respect of tax on NSF dispensation within GEPF • Income Tax legislation amended to recognise NSF service as pre-1998 (tax free) • SARS recognises the total NSF member contribution as deductible in the year of payment • Tax on previous benefits not re-paid

12. DOD Statistics as at 10 April 2007

13. NSF Roll-out • The following departments have received NSF applications forms and NSF quotations: • GCIS • Foreign Affairs • Correctional Services • Home Affairs • Gauteng Housing • National Communication • National Prosecuting Authority • Regional and Land Affairs • Social Development • SAPS • Intelligence Services

14. NSF roll-out • The following departments are in the NSF costing process with the Actuaries: • Eastern Cape Local Government • Western Cape Provincial Government • Western Cape Social Development • Eastern Cape Department of Transport • Eastern Cape Public Works and Roads • Public Service Commission • Local government and Traditional Affairs • Department of Justice • Limpopo Legislature • SARS • Department of Agriculture • GSSC • Gauteng Premier’s Office • Gauteng Department of Agriculture, Conversation and Environment

15. Thank You Questions and Discussion