Meeting SummaryThe Deputy Minister of Finance and members of the Special Pensions Office (the Office) briefed the Committee on the purpose and status of Special Pensions. The Special Pensions (SP) Act was established in 1996, giving effect to section 189 of the Constitution. It provided for the payment of special pensions to persons who made sacrifices or served the public interest in establishing of the democratic Constitutional order. The import of the various Amendment Acts was also explained. It was reported that between January 2009 and December 2010, 9 924 applications had been received, and 7 563 were processed. There were 3 440 applications that were rejected because they did not comply with the age requirements stipulated in the SP Act. There were 2 361 applications still being verified. It was noted that the Office had managed to reduce the time taken to process the applications, to around 90 days if the application was properly completed. There were still a number of incomplete applications, and where all attempts to contact the applicants had failed, the files were closed until they resurfaced. In all, since the Act was introduced, the Office had received 71 272 applications, of which 21 490 were approved, 35 895 declined, and 9 373 declared late. The applications still in the process, including the backlog, numbered 4 514. The average number of those receiving monthly payments was 7 010. The SP would now only reinstate members that were still in service and contributing to the Government Employee Pension Fund (GEPF).
The Committee welcomed the presentation, noting that this was the first time it had been briefed for some years. Members asked why the board rejected applications, and sought clarity why referees were not contacted to check for eligibility, commenting that the process would have been much simplified in this way, and saying that it seemed that some of the procedures encouraged fraud and corruption. They questioned what was done about late applications. Members questioned why the Special Pensions would only be reinstated to members who were still in service and contributing to the Government Employees Pension Fund (GEPF), and asked about those who had been excluded. The Deputy Minister explained that there were various forms of benefits available, from which members of the non-statutory forces could choose, and also explained that everything done by the Office was in terms of the legislation passed by Parliament. Members also asked why the special pensions were taxed, and commented that the process was complex. A Member suggested that it would be necessary to hold a workshop to gather more information, and the Deputy Minister agreed, but urged Members also to read the legislation in the meantime and to gather information about any aspects that may need to be amended further.
Special Pensions: Implementation report
Mr Stadi Mngomezulu, Deputy Director General: Corporate services, National Treasury, said the Special Pensions (SP) Act was established in 1996, giving effect to section 189 of the Constitution. It provided for the payment of special pensions to persons who made sacrifices or served the public interest in establishing the democratic Constitutional order. In 1998 the Act was amended so that applicants might receive monthly pensions from the age of 35, as opposed to 50 or 60. Those who were terminally ill were also included. Another amendment, in 2003, accommodated later applications that were received after 1 December 1997. In a further amendment, in 2005, more new benefits were such as payment of a monthly spouse’s pension, payments of a monthly orphan’s pension and payment of funeral benefits.
The initial Act set 31 December 2006 as the closing date for all applications for Special Pensions (SPs), but this was later extended. The introduction of the 2008 Amendment Act and elimination of backlogs increased the SP processing capacity, by introducing more streamlined processes and performance management, whilst there had been appointment of more and appropriately skilled personnel in adjudication and the Appeals section. This Amendment Act provided for the appointment and training of additional personnel at regional level, a call centre and client care. The Government Employee Pension Fund (GEPF) and SP Office had since been integrated at regional level and the SP offices were renovated for effective monitoring and security. People were reorganised in the unit and the management capacity had been increased.
The entity undertook various actions before the final closing date in December 2010, to raise awareness of the 2008 amendments. Materials were developed for Radio and newspapers adverts, which were aired and published between May 2010 and December 2010 respectively. The Deputy Minister conducted roadshows from August 2009 to December 2010. The regional coordinators rolled out an outreach programme in each district municipality, which assisted greatly since some applicants could not travel to towns and cities. A decision was taken to extend SP training to the African National Congress’ (ANC) Parliamentary Constituency Officers (PCOs), in order that trained representatives could assist the qualifying members in completing application forms and raising awareness, and in order to train representatives assisting with initial verification. Training was done in all provinces and was completed in July 2010. The training was extended to PAC and AZAPO as well.
The backlog at verification level was reduced by 97% (from 3180 to 114) as at the end of March 2011. Those 114 backlog applications had since been reduced to 10, as at end of September 2011. The Appeal backlog was reduced by 96% (from 2106 to 76 cases) as at end of March 2011 while 76 were completed in April 2011. The other secondary benefits applications for spouses and orphans were finalised within 30 days, as compared to more than 6 months previously.
The total number of applications received from January 2009 to December 2010 was 9 924. The number of applications processed was 7 563. There were 3 440 applications of those already processed that were rejected, because they did not comply with the age conditions. The applications still at verification level numbered 2 361. The turnaround time for processing a properly completed under-35 application was, on average, 90 days, a reduction from the previous time of about 12 months. The entity still had incomplete applications after a number of efforts to reach applicants, and outstanding information, but was attempting to solve this through making telephonic contact, sending letters and final letters of demand. Management removed the incomplete files from the backlog and closed them temporarily until the applicant resurfaced; so those were declared as dormant. There were 7 395 late applications received after the 2006 closing date (31 December 2006). Another 1 978 applications were received after the December 2010 closing date, and those were declared late. In 2005 the over-35 group had an opportunity to challenge the decision of the Review Board through submission of new material facts, in terms of section 7(2) of the SP Act, while in 2008 the under-35 group that were rejected at Appeal Board had expressed their dissatisfaction about the discontinuation of the section 7.2 provisions. Some applicants resubmitted disqualified evidence for their appeals, which caused delays in processing, as further research had been requested by the Appeals Board.
He summarised that the entity received a total of 71 272 applications of which 21 490 were approved, 35 895 declined, and 9 373 were declared late. The number of applications in process, including the backlog, were 4 514. The average number of people receiving monthly annuities was 7 101.
A Cabinet Memorandum had been approved on 24 November 2010, and a further amendment to the Special Pensions Act was presented to the Standing Committee on Finance, on the 23 August 2011. This was to the effect that only those members who were still in service, and contributing to the Government Employee Pension Fund (GEPF), would be reinstated.
Ms P Daniels (ANC) said the presenters did not indicate what would be done with late applications and asked if the Department looked whether late applications qualified.
Ms Daniels also was confused as to the reasons why Special Pensions would only be reinstated to members who were still in service and contributing to Government Employees Pension Fund (GEPF). She asked why there was a focus only on those who were still in service, and wanted to know about those who were excluded and who no longer received Special Pensions.
Ms Daniels asked why there was taxation on Special Pension.
Ms Daniels noted the comment that there were still people eligible for the Special Pension who could not be located, for various reasons. She asked if the Department had thought of calling upon the Department of Home Affairs or the South African Police Service to find out if members were still alive.
Ms Daniels finally requested more information on the policy on late applications.
Mr S Montsitsi (ANC,
Mr Montsitsi was concerned that it seemed as if the Board may have rejected applications and, when applicants resubmitted, did not call in the verification board to check references. He wanted to know why the board did not guide applicants as to why their applications had been rejected. He wondered if the members of the Board themselves had been well enough acquainted with the subject.
Mr A Maziya (ANC) welcomed the presentation and asked why the Board rejected applications. He also sought clarity why referees were not contacted to check for eligibility. It seemed as if the practice encouraged fraud and corruption and he would like to see the process being corrected. He had been a referee for many applications, but had never received a call from the Board.
He noted that some people had joined the Umkhonto We Sizwe at a very young age, between 10 or 12, and he noted that exclusions must be based on the facts. He asked under which category those applicants fell. He asked if there was a help desk to assist applicants in correcting the forms if they were rejected. He would appreciate it if he received a call for verification.
The Chairperson wanted to know the actual purpose of the deadline for receiving applications.
Mr Nhanhla Nene, Deputy Minister of Finance, replied that the officials present had the primary task of seeing to the implementation of Parliamentary legislation. The deadline had been written into the legislation, and the Board’s decisions and operational procedures were informed by legislation. The main reason for the amendment in 2003 was in order to be able to accommodate late applications. Again, he pointed out that nothing different could be done unless Parliament directed otherwise. The process to see if late applicants qualified would be addressed properly as soon as the backlog had been dealt with.
Mr Nene confirmed that some of the problems with rejected applications did relate to the personal history of the applicants. The Board did receive a level of cooperation in verifying information, but it was not as satisfying as expected. He requested political parties to assist with the issue on regional and branch level.
Mr Nene noted that he was pleased to have been invited to make this presentation, but pointed out that there had been regular reporting to Parliament and the Department would be available for future presentations. He requested political parties to assist applicants in compiling biographies, and the reason why some people were not called was because their references had been accepted. The problem might not always be related to references but to something else. Again, he stressed that the legislation bound the officials in the way they handled the implementation of Special Pension. He encouraged Members of the Committee to examine the legislation if they thought it was inadequate, pointing out that the correct procedures had been followed.
Mr Kabelo Jonathan, Senior Manager: Special Pensions, National Treasury, noted that the special pensions benefits were taxable, in terms of the taxation laws. South African Revenue Services (SARS) were the custodians of taxation laws. The Members were free to engage SARS who were the drafters of the legislation if it was found not to be desirable.
Mr Mngomezulu said that special pensions were provided to members who were still in service and contributing to GEPF, because this was the way that the legislation had been crafted. He too stressed that nothing could be done outside of the provisions of this legislation. The amendment of the Special Pensions Act in 2005 introduced benefits to spouses of deceased beneficiaries, who could then claim monthly payments. If there was no surviving spouse, the deceased person’s children could claim, until they were 18 years of age, and after that a special application was needed, but there was the possibility of extending the benefits to age 23. All benefits ceased at age 23, except that people with disabilities could benefit until death.
The Deputy Minister said the entity processed 3 191 applications from exited members for refunds, but 298 bank accounts had been rejected. Many accounts had been deactivated by banks. The Office for Special Pensions had followed up, but had to admit that it was sometimes difficult to get hold of members for refunds. He called upon members of the Committee to assist in tracking beneficiaries.
Ms P Daniels (ANC) did not understand why Special Pensions were only applicable to members who were currently serving. She asked if the entity was linking Special Pensions to Non-Statutory Force (NSF) pension dispensation because this seemed like two different processes. The Committee had been told that the communication campaign went well but late applications persisted. She wanted to know why SP did not have user-friendly forms that would make the application process much easier.
Ms Daniels said that no mention had been made of people who may have received benefits fraudulently.
Ms Daniels asked if married members of the forces could both receive Special Pensions if they applied, because she had heard that they could not.
Ms Daniels asked if children benefiting from SPs could continue to be assisted with their education once the cut-off date was reached.
Mr Montsitsi said many people laid down their lives so that
Mr A Maziya (ANC) said applications were very complicated, and for this reason they had excluded many.
Mr Maziya expressed the view that there was a problem with the whole programme and asked the Committee to have a joint three-day workshop with all the relevant stakeholders to address all the challenges regarding SP.
The Deputy Minister appealed to Members of the Committee to familiarise themselves with the legislation. However, he agreed that the workshop would be of great value.
Mr Nene reiterated that those members who exited the system were given refunds, except where they could not be traced and their bank accounts were not active. He pointed out that the SPs were similar to other benefits to NSF members, who were given the choice as to which they wished to claim. The Department was indeed struggling with ensuring that the system addressed only those who qualified, as many people had tried to take advantage of the benefits.
Mr Nene said that in fact the forms were user-friendly, and only mirrored what was stipulated in the legislation. It should be noted that the purpose of the forms was not to exclude.
He stated that a married couple could both still benefit from special benefits even though they were married, although and some people might have been left out of the system after the amendments. If this was so, they should approach the Office for SP, who would be glad to assist.
Mr Nene explained, in respect of the taxation system, that it was necessary to look at taxation holistically. Tax was paid on income and this was part of income. The first 300 000 applications were tax free while the rest were taxed at a concessionary rate. Taxation should be looked at holistically because it also included the broader issue of income which determined the tax to be paid on income.
Mr Mngomezulu responded that beneficiaries over the age of 23 were usually given a lump sum, in a once off payment. The benefits were divided equally among dependents if there was more than one beneficiary. He agreed that a workshop would be of great value and would help to straighten out all the shortcomings in the Special Pensions Act.
The meeting was adjourned
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