Special Pensions: Deputy Minister of Finance and National Treasury briefing

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Finance Standing Committee

23 August 2011
Chairperson: Mr T Mufamadi (ANC)
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Meeting Summary

The Deputy Minister of Finance and National Treasury officials briefed the Committee on the Special Pensions, which were set up in terms of the Special Pensions Act of 1996 to compensate those who, owing to their involvement in the struggle to end apartheid, had not been able to be in regular employment or make regular payments into a pension scheme for their old age. Various amendments were made to that Act from time to time, and broadly speaking, those who were aged over 30 as at 1996 had been able to apply for a Special Pension, as well as those who were terminally ill, and orphans, and funeral benefits were also included. At one stage there had been an allowance for late applications. As the Act was amended, additional staff were appointed, at regional level, at the call centre, and through training of client care personnel both from the Special Pensions and Government Employee Pension Funds Office. Awareness campaigns had included road shows, radio and newspaper advertisements, targeted visits and awareness through constituency offices. The verification backlog and appeals backlog were vastly reduced. For those aged between 30 and 35 in 1996, 9 924 applications were received, but 3 440 did not meet the requirements. Most applications were now processed, if properly completed, within 90 days. However, there were major challenges with incomplete applications, 7 349 late applications, dormant files and fraud and corruption. In answer to later questions, the figures for fraud and corruption were stated at 167 cases of possible fraud and corruption, of which 141 cases had been identified by the Special Investigating Unit (SIU), and 18 by the Hawks. Two officials in Port Elizabeth had been dismissed, and six were still being charged. The Deputy Minister had made unannounced visits to check on the Special Pensions office and had addressed instances of poor functioning severely.

Members confirmed that in some of the constituencies, the Special Pension team had made substantial progress. They asked if the staff establishment was sufficient and could respond to the needs, asked about the number of applications in a number of categories, and how dormant applications would be activated again. Members noted that there had been calls to extend the scheme also to those who were under 30 in 1996, but the Deputy Minister pointed out that this was a matter that would need to be addressed in amending legislation, should the Committee feel very strongly on this point. They also enquired how the various organisations were being kept informed.


Meeting report

Special Pensions: Deputy Minister of Finance and National Treasury briefing
Mr Nhlanhla Nene, Deputy Minister of Finance, highlighted that the issue of Special Pensions was a very important one. He noted that there was a specific background to Special Pensions, which could be paid to those who made sacrifices or served the public interest to establish a non-racial democracy in South Africa, as it was assumed that they had made sacrifices on behalf of the country which prevented them from working and saving for their older years. The Special Pensions Act was passed in 1996, and this gave effect to section 189 of the Constitution. The Act was amended in 1998, so that people could then receive monthly payments instead of once off payments, and to include terminally-ill people. In 2003 there was an amendment to allow for late applications. In 2005 new benefits were included, such as the monthly payment to a spouse or an orphan, and the inclusion of funeral benefits. The Act was amended in 2008 in order to deal with people who were between the ages of 30 and 35 at the time the Act came into effect in 1996. The Special Pensions payouts could not be regarded as compensation, but were made available in order to cover the gaps during which people lost out on the ability to pay into pension schemes, when they were making sacrifices for the country.

Mr Kabelo Jonathan, Head of Special Pensions, National Treasury, presented a progress report on Special Pensions (SP). He said that, in order to accommodate the 2008 amendment and eliminate the backlog, the SP processing capacity was increased through the appointment of appropriately skilled personnel in adjudication and appeal processes, and there had been appointment and training of additional personnel at regional level, at the call centre and client care. In addition the Government Employees Pension Fund (GEPF) and SP resources were integrated at a regional level, and there was renovation of SP offices for effective monitoring.

A number of actions were undertaken to raise awareness of the 2008 amendment, such as road shows by the Deputy Minister from August 2009 to December 2010, and the development of materials for radio and newspaper adverts. In addition, regional coordinators had rolled out outreach programmes through district municipalities, and this assisted applicants who could not reach the towns and cities.

He reported that the SP backlog at verification level had been reduced by 97%, and the appeal backlog had been reduced by 96%. Out of the total number of 9 924 applications that had been received for those under the age of 35 years, 7 185 had been processed but 3 440 had been rejected, due to the fact that they were under the age of 30 or over the age of 35 years. The average turnaround time of processing a properly-completed application for someone under 35 years was around 90 days, as opposed to an average of one year in the past.

Mr Jonathan noted that most of the challenges lay with the incomplete applications.  A number of efforts were made to reach applicants and collect outstanding information, including trying to phone them, sending letters, and sending final letters of demand. Management had then taken a decision to remove the incomplete files from the backlog, and had closed them temporarily until the applicant resurfaced, so these were declared as dormant. There was also an issue with late applications. There were 7 395 late applications received as at 31 December 2006. The SP office also faced challenges around fraud and corruption, with a number of cases identified. These cases were at various stages of investigations.

On the recommendation of the ANC, a decision was taken to extend Special Pensions Training to the ANC's Parliamentary Constituency Officers (PCOs). The purpose of training was to enable the constituency representatives to assist qualifying members in completing application forms and raising awareness. Trained representatives would also assist in the initial verification. The training was conducted in all provinces, and was completed in July 2010. In addition, that training was extended to PAC and AZAPO representatives.

Mr Nene highlighted that the Committee would be aware of the challenges that were being faced in the area of Special Pensions and assured Members that considerable effort had gone into trying to address those challenges. Substantial progress had been made. He added that at times he had “behaved like a school principal” and had himself made a number of unannounced visits to check progress. He had found that in some cases morale was low, a good work ethic was not present and matters were not properly organised, with certain offices having underestimated the intricacies of the challenge. When he had found that, he had adopted a very strict approach to the team.

Discussion
Dr Z Luyenge (ANC) noted that the Special Pension team was making progress. He said that the Special Pensions team had visited his constituency office in Mthatha, and commended the Special Pension office and the Minister. He had seen the Deputy Minister making visits to his constituency, and he assured Members that in that constituency, the poor people were receiving visits and being informed about the SP. He asked whether the staff establishment was responding to the need, and whether there was a plan in place to minimise the challenges that the special pensions office faced. He added that the Committee was proud of the special pension’s office.

Dr D George (DA) asked whether the number of applications that the SP office had received were in line with what it had expected, and what the cost implication was.

Ms P Adams (ANC) asked for the number of dormant applications and what steps had been taken to ensure that dormant applications were activated.

Mr D Van Rooyen (ANC) welcomed the presentation and asked that information on the number of applications per district be made available to district offices so that they could monitor progress. He also noted that there was a call for an amendment to accommodate those who were under 30 in 1996. He asked to what extent the SP office had engaged with political parties in order to deal with the problems of incomplete applications. He enquired as to the number of incomplete applications, and he also noted that no figures had been given for late applications. He asked whether there was an alternative to dealing with late applications. He also wanted to know the number of potential fraud and corruption cases were being dealt with. Lastly, he asked whether the funding model was sustainable.

Mr Nene thanked the Members for their acknowledgments of the efforts that had been made by the Special Pensions office. He assured them that there were engagements with political parties at every level of operation, since the SP Office had written letters to the Secretary General of every liberation movement, and kept those movements updated on developments. However, he said that the process was not easy, because records were simply not available in some of the political parties or liberation movements, and it was generally in relation to these where the fraud had arisen.

Mr Nene said that the SP office had not overspent on the budget. It was difficult to be accurate with the costing of such an exercise, due to the number of applicants. The cost of the project was, however, secondary to the plight of the people. The figures requested would be forwarded to the Committee.

He responded to the question of people being excluded because of age by saying that there would never be a time when every single person would be accommodated. The age limit was first set at 50, then it was reduced to 35, and now they were dealing with people who were under the age of 30. Due to the desperation and problems caused by apartheid, people had a tendency of thinking that all their problems would be solved by Special Pensions. The specific purpose of Special Pensions was to make up for the time during which people could not save for their retirement, due to their involvement in the struggle.

Mr Nene pointed out that the issue of late applications was a political matter. The SP Office only implemented what Parliament instructed it to do, in terms of the legislation. He added that he would be happy to see further assistance being given in the matter of Special Pensions.

Mr Jonathan said that he could provide some figures. There were, in total, 1 630 dormant applications. 738 came from the old backlog, and 902 came from the Pondoland and Bizana areas. The total number in the Bizana area was 1 585. Out of the 1 585 people who were given application packs, 683 responded, but from those, 328 applications were duplicates, so only 325 people were eligible to be processed.

He noted that the registered cases of fraud and corruption were those which had been reported to the Special Pensions internal fraud unit and the South African Police Service. 167 cases of possible fraud and corruption had been identified. 141 cases had been identified by the Special Investigating Unit (SIU). A further 18 new cases had also been identified and reported to the Hawks. The National Intelligence Agency was assisting the Special Pensions office in profiling the suspects. Two officials in Port Elizabeth had been dismissed. There were six officials who had been charged with fraud internally.

Mr Jonathan noted that there were figures available for the districts, but as he did not have them with him, he would submit them to the Committee in writing.

Mr Jonathan then noted that in the past the Government Employees Pension Fund customer service agents were only servicing civilian pensioned members, and Special Pensions customer service agents were only servicing Special Pensions. This was not desirable and so there had been a proposal made to the GEPF customer service management to train their agents on the Special Pensions Act, and vice versa, so that any customer service agent would be able to advise both on civilian and Special Pensions. In that way, the staff complement had been increased. In addition, ten dedicated Special Pension call centre agents had been appointed, and the SP Office had its own call centre number.

The Chairperson appreciated the information that had been presented to the Committee. The Special Pensions had been of concern to the Committee and Parliament. Progress made was reflected in the comments and questions by Members. He urged that constituency offices be utilised intensively. He added that the Committee was available at any time to assist the Special Pensions office, and thanked that office for its efforts.

The meeting was adjourned.

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