RECOGNITION OF FORMER NON-STATUTORY FORCE (NSF) SERVICE FOR THE PROVISIONING OF PENSION BENEFITS

1. RECOGNITION OF FORMER NON-STATUTORY FORCE (NSF) SERVICE FOR THE PROVISIONING OF PENSION BENEFITS Government Employees Pension Law Amendment Bill Special Pensions Amendment Bill National Treasury

2. Background Introduction • Seven former forces were amalgamated into the SANDF on 27 April 1994. • Since 1994, 21 334 members joined of which 14 722 (15 Jan 2003) are still in the service. • Disparity existed regarding the recognition of previous service for pension purposes of former Statutory Forces vs. former NSF • The intention of the Policy is to address this disparity between former non-statutory and statutory forces in the fairest manner possible within Government financial constrains. National Treasury

3. Aim To obtain approval of the Portfolio Committee on Finance for the GEPF Amendment Bill and Special Pensions Amendment Bill • Scope • Purpose • Definitions • Policy Provisions • Implementation Requirements • Implementation Roles and Responsibilities National Treasury

4. Purpose Purpose of Bills The Government Employees Pension Law Amendment Bill seeks to allow non-statutory force (NSF) members access to a GEPF pension for the period served before incorporation into, inter alia, the SA National Defence Force. The Special Pensions Amendment Bill seeks to prevent a former NSF member from receiving both a GEPF pension and a special pension. The stated Bills also provide for other State Departments to participate, i.e. NIA, SAPS, etc. should Cabinet approval be obtained by the said departments. National Treasury

5. Definition : NSF 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 joined either of those forces on or before 31 December 1990; and • Who have entered into an agreement with the Department of Defence (DOD) as civilian (Public Service Act employees) or Defence Act employees (uniform members) through integration or the normal personnel acquisition process • Included are members who were serving on short term service contracts as well as members who have been paid benefits but who would have been entitled to greater benefits had his/her service as a NSF member been taken into account. National Treasury

6. DEFINITIONS (CONT) • NON-STATUTORY FORCE SERVICE • THE PERIOD BETWEEN THE DATE ON WHICH NSF MEMBERS JOINED THEIR RESPECTIVE FORMER FORCES AS REFLECTED IN THEIR SERVICE CERTIFICATES AND THE DATE OF THEIR TAKING UP EMPLOYMENT OR ENTERING INTO AGREEMENT WITH OR THEIR ATTESTATION INTO THE DOD PROVIDED THAT THE SERVICE WILL ONLY BE RECOGNISED FOR THE PERIOD AFTER THE MEMBER ATTAINED THE AGE OF SIXTEEN YEARS National Treasury POWERPENSIONNEW.PPT

7. Definition - Continued • The qualification period is between the date on which NSF members joined their respective former forces, as reflected in their service certificates, and the date of their taking up employment or entering into agreement with or their attestation into the DOD. Provided that the service would only be recognised for the period after the member attained the age of sixteen years. • NSF beneficiary • A person who is or will become entitled to any benefit from the fund by virtue of his/her relationship to NSF members National Treasury

8. POLICY PROVISIONS CATEGORIES OF NSF MEMBERS LENGTH OF SERVICE CATEGORY A LESS THAN 10 YEARS B 10 YEARS AND MORE BUT LESS THAN 20 YEARS C 20 YEARS AND MORE BUT LESS THAN 30 YEARS D 30 YEARS AND MORE National Treasury POWERPENSIONNEW.PPT

9. POLICY PROVISIONS (Cont) Alternative Service Recognition Options * Scenario 5 was approved for implementation National Treasury

10. POLICY PROVISIONS (Cont) Financial scenarios & Funding * Scenario 5 was approved for implementation The Cabinet approved, on 8 November 2000, the implementation of scenario 5 in terms of which R 501m (of the R1.5bn set aside by the GEPF in terms of PSCBC Resolution 7/98) is to be used to fund the employer’s portion of the DOD. National Treasury

11. Category Length of service Average age at integration A Less than 10 years 23 B 10 years and more but less than 20 years 33 C 20 years and more but less than 30 years 43 D 30 years and more 53 POLICY PROVISIONS (Cont) Categories with Age Distribution National Treasury

12. POLICY PROVISIONS (Cont) • Employer contribution - 15% • Member contribution - 7,5% • optional • series of payments or once off lump sum • Impact of special pension on NSF pension benefits • Members who preferred not to join DOD are excluded as: • they have received demobilisation benefits • can be considered for special pensions benefits National Treasury

13. Implementation – Legal Requirements • Amendment of the Government Employees Pension Law, 1996 • Amendment of the Special Pension Act, 69 of 1996 • Amendment of rules of the GEPF • part of PSCBC Resolution 12/2002 National Treasury

14. Implementation – Roles & Responsibilities • DOD • Launch road show to communicate the NSF dispensation • Source and verify data of members who qualify • Provide data to pensions administration for matching purposes • Dispatch letters of offer to qualifying members • Process applications for onward transmission to pension administration • Resolve issues of dispute where applicable National Treasury

15. Implementation– Roles & Responsibilities • PENSIONS ADMINISTRATION • Manage and assist in the legal process • Finalise draft Bills which were submitted for Cabinet approval • Actuaries - develop formulae and software • Conduct system changes to accommodate requirements of NSF pension implementation • Map data supplied to pensions administration, test and verify data mapping • Provide training to DOD NSF pension project team National Treasury

16. Implementation – Roles & Responsibilities • SHARED RESPONSIBILITY (DOD, ACTUARIES AND PENSIONS ADMINISTRATION) • Design and develop of application forms ( in process ) • Compile letter of offer to qualifying members ( in process ) • Management of NSF pension project National Treasury

17. Questions and Answers National Treasury

18. Legislativeprocess • The relevant memorandums requesting the approval of the Bills were submitted to the Minister of Finance in September 2002. • The Cabinet Committee on Governance and Administration recommended on 17 October 2002 that Cabinet approve the introduction of the Bills into Parliament. • On 23 October 2002 Cabinet approved the recommendation of the said Committee. • The Bills were submitted to the Chief State Law Advisors for scrutiny and certification. • The Bills were published in the Government Gazette for public comments by 20 January 2003. • The Bills were certified by the Chief State Law Advisors on 21 January 2003. • The applicable amendments to the Rules of the Government Employees Pension Law were submitted to the Government Printers on 24 January 2003. National Treasury

19. Implementation - actions to date • Initial sample data set received and validated against GEPF records. During testing it was identified that more information is required. • Second data set for 21000 members was received and is currently being mapped against the GEPF member records. The testing of the results obtained should be completed by 31 January 2003. • DOD identified 13 members to be trained on application process. GEPF to schedule training. • The NSF application form has been drafted and is with the GEPF IT team for evaluation. The forms will be provided to members once approved by IT and legal sections. • Initial communication letter drafted and is being reviewed. National Treasury

20. Implementation - future actions • Relevant Bills to be approved by Parliament. • Implement NSF process in GEPF and DOD. • Cases for 21 334 possible NSF members will be processed according to priority: • The cases of the 32 members in service and on special leave, will be processed and payments made where required. These cases are ready to be paid subject to finalisation of legislative process. • The cases of the estimated 6580 members who have left the service due to death, resignation, etc will be processed, recalculated and the required adjustments will be made. • The cases of the estimated 14722 members who are still in service will be processed once completed applications have been received. For these members the period of service will be corrected. • No payment will be made, but members will have to make a selection in terms of how to fund the members’ contribution. National Treasury