Special Pensions Act: briefing on proposed amendments


22 August 2013
Chairperson: Mr J Maake (ANC) Co-Chairperson: Mr S Montsitsi (ANC, Gauteng)
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Meeting Summary

The Chairperson tabled correspondence for the attention of the Committee, and agreed to a request from a Member that correspondence forwarded to the Chair should also be copied to Members so that they became aware of issues sooner. It was confirmed that Members of this Committee had been invited to observe the Arms Commission hearings. A draft programme was also tabled, and it was noted that on 24 October the Committee was due to consider the Minister’s briefing on the Central African Republic in April. A Member asked that a date still needed to be set for discussion of his own correspondence also on the Democratic Republic of Congo issues.

The Office of the Chief State Law Adviser presented some proposals for amendment of the Special Pensions Act, which had been requested by the Committee to address issues of concern raised during its oversight and constituency work, about entitlement of dependants to benefits. The changes were not yet incorporated into a tabled Bill. The purpose of the Special Pensions Act was briefly outlined, stressing that this was intended to provide special compensation for those who, by reason of their involvement in the struggle, had been unable to take on permanent employment and contribute to a pension fund in those years. The changes that were now being presented essentially sought to ensure that there would not be any discrimination in respect of children or partners of a pensioner, because they sought to recognise customary, religious, common law or polygamous arrangements. The word “orphan” was being removed, because it had been found that in practice not all children of a pensioner were being equally treated, with the orphaned children receiving more benefits than those who still had one parent living. The changes aligned with principles of intestate succession. Most importantly, the changes would not involve any additional burden on the fiscus. The pensions and lump sum amounts would not alter, but the way they were distributed would be equalised. The word “person” was being substituted, insofar as it related to the lump sum, with “surviving spouse and a surviving dependent” (or, in the case of the monthly pension, with “surviving spouse or a surviving dependant” consistently. The word “dependant” was defined and was quite wide, including all children, adopted children, and those who would have been entitled to claim maintenance if the pensioner was still alive. There would be an updating of wording, to reflect changes in the way in which personal partnerships were now referred to in other legislation. Because all references to “orphans” were to be removed, this definition was also to be removed. those who would have been legally entitled to maintenance if the deceased had not died. The offences clause was to be expanded by providing for a separate offence, to be sanctioned with the same penalty as applied to fraud, for persons who intentionally submitted false claims for benefits.

Members’ questions on the proposals presented were largely questions of clarity. One Member asked if the new offence could be with retrospective effect, but the State Law Advisers responded that in principle this was not desirable, and in any event, a person submitting false information prior to the amendments coming into operation would still be liable to be charged with fraud. Members then raised some concerns around the principles of eligibility for the Special Pensions. One Member suggested that the age requirement should be excluded, instead relying on proof of involvement. She also questioned the administrative problems that had arisen with surviving spouses being told that they were not eligible for certain lump sum benefits, despite the fact that they would have been so entitled if not married, and cases where current SANDF members now claiming pension were asked to repay their special pensions. Another Member agreed that there seemed to be major administrative problems in the Boards and their composition needed reconsideration. Members agreed that, in order to expedite the legislation that would regularise the position for dependants, those changes outlined in the presentation, which would not have any financial implications for the fiscus, should be processed urgently, whilst the remainder of the proposals should be incorporated into a separate document for further discussion.

Meeting report

Chairperson’s opening remarks
The Chairperson noted an apology from the office of the Minister.

Correspondence forwarded to Committee and programming issues
Chairperson J Maake (ANC) read out a letter of 27 June, relating to employment of the South African National Defence Force (SANDF) members who would be employed, in cooperation with South African Police Service (SAPS) and other State departments, to ensure adequate security during the official state visit of the President of the USA.

A second letter was referred to the Speaker, informing that office that the Arms Procurement Commission would be holding public hearings, commencing on 5 August 2013, and inviting the Speaker or representatives to observe those hearings.

The Committee Secretary noted, in answer to a question from the Chairperson, that there had also been a direct invitation to this Committee from the Arms Procurement Commission.

The Chairperson asked the Committee Secretary to send all the names of this Committee to the Commission, so that anyone wanting to attend should be able to do so, at any time.
The Chairperson tabled a third letter, received on 8 August 2013, advising of the termination of services of two members of the Armscor Board. The termination had been done under section 8(c) of the Armscor Act No 51 of 2003. There should not be any disruption to the workings of the Board because the quorum was the majority of Members of the Board.

Mr D Maynier (DA) wanted to raise two issues. Firstly, because there were not many sitting days for this Committee to meet, he asked the Chairperson to agree that correspondence forwarded to him should then also be copied to Members by the Committee Secretary, so that Members did not wait for so long before becoming aware of that correspondence.

Secondly, he had asked that correspondence from him in respect of the Democratic Republic of Congo (DRC) and Central African Republic (CAR) be forwarded to Members and he asked that this should still be done.

The Chairperson noted and acceded to the first request. In regard to the second issue, he noted that there was already a programme item dealing with this, when the Department of Defence would be asked to speak to the Committee.

Later on, after the programme was distributed, Mr Maynier noted that on 24 October the Committee was due to consider the report on the Central African Republic, tabled by the Department of Defence in April. He was not aware that such a report was tabled in Parliament, or that it was sent to the Committee.

Co-Chairperson Mr Montsitsi clarified that this referred to the briefing given by the Minister during a previous meeting in the Marks Building.

The Chairperson confirmed again that the programme was still in draft.

Mr Maynier pointed out that there was nothing on the programme referring to the DRC.

Ms N Mabedla (ANC) asked what the terms of the invitation to the Arms Commission hearing was, and if expenses would be covered.

The Chairperson said he was not sure. The Commission might sit for the whole year and it would be clear that Parliament could not foot the bill for Members for the whole year. He asked that the Committee Secretary check up on this issue.

Special Pensions Act: Proposed amendments: Office of Chief State Law Adviser briefing
Ms Suraya Williams, Principal State Law Adviser, Office of the Chief State Law Adviser, noted the apology of the Chief State Law Adviser, who was attending court.

Ms Williams explained, by way of background, that the Office of the Chief State Law Adviser (OCSLA) had been asked to draft some proposals for amendments to the Special Pensions Act, which was passed in 1996 under the Interim Constitution. Her presentation would set out the proposals. She explained that the Special Pensions Act (the Act) gave effect to section 189 of the Interim Constitution, providing for payment of pensions to those who, because of their involvement in the struggle, had been unable to engage in other employment and contribute to pension funds. The special pensions aimed to compensate them, or their dependants, in this regard.

When the 1996 Constitution took effect, further amendments were made, including improved accessibility of benefits and interim payments.

Members of this Committee had raised concerns, based on problems expressed during their constituency and oversight visits, about access to benefits. The proposals she would present essentially sought to meet those concerns. The proposals, in particular, sought to provide for the position of all dependants and to provide particularly for those who were orphaned, with both parents now being deceased.

Ms Williams said that the drafters had looked at formulas provided for in other laws, in relation to intestate succession and winding up of estates, and these were taken into account when providing for greater accessibility on payment of benefits, and assessing how the benefits would be divided.

The first insertion related to section 2 of the principal Act: Right to survivor’s lump sum benefit. The proposal was that the word “person” would be substituted with “surviving spouse and a surviving dependant”. This was essentially done to given effect to the recognition of diverse cultural and religious arrangements in South Africa, including recognition of polygamous marriage or partnership arrangements. A wider definition and mechanism was needed to provide for a person who may have had more than one partner, and children from various arrangements. The dependants would now stand in line together with the surviving spouse, and this principle had been taken into account when making a number of other changes. Ms Williams stressed that where a lump sum was paid, it would now be divided between all dependants.

In sections 3 and 4 of the principal Act, it was proposed that the words “a person” would be substituted with “any person”, in line with what she had just outlined.

Section 5 of the Act currently provided for a survivor’s benefit. In future, the Board must determine the proportion to be paid to each spouse and dependents. However, Ms Williams stressed that the maximum amount that would be paid out would not exceed the amount that would have been paid out had there been only one spouse. In other words, the benefit amount was not being increased, but all dependants would share in that benefit. The more dependants there were, the less each would receive.

Section 5(2) was to be changed, so that if the spouse survived, but there were no dependants at all, the spouse would receive the survivor’s benefit. Further subsections set out the principles when a person was survived by a dependent, but not by a spouse.

Ms Williams noted at this point that the word “dependant” was defined in the existing Act. In line with general drafting principles, the singular included the plural. 

Proposals for a new section 6C set out the consequential amendments in relation to the lump sum benefits, setting out the rights of surviving spouse and dependants in a similar way to earlier proposed amendments. If a pensioner was survived by a dependant, but not by a spouse, the dependant would receive the survivor’s benefit.

The same applied to proposals for section 6D, which dealt with the monthly pension. Again, provision was being made for the surviving dependants, and whatever amount was paid must be divided; it would not increase according to the numbers.

Ms Williams reminded Members that during a previous meeting, there had been concerns about the position of children of the pensioner. Some of the children may be orphans, and some may not, when the pensioner had more than one spouse. The drafters had now omitted all reference to “orphans” and instead provided for “dependants” so that there was no distinction between the type of dependants, and all dependants would inherit equally.

The Chairperson interjected to ask if there was any other law that would deal with orphans.

Ms Williams responded that the reason for this amendment was that Members had pointed out that there could be situations where children of the pensioner whose mother was still living would be excluded, but their step-siblings, whose mother may have died, would be provided for. Not all children of the pensioner had therefore been benefiting equally. The Committee had been of the view that this situation should be corrected. She pointed out that these changes in wording were carried through the whole of the section.

Section 6E provided for the allocation of equal shares and benefits. Again, the references to orphans had been removed, and there was now recognition only of “dependants”.

Ms Williams read out the definition of “dependant”, which was quite broad. The wording referred to “unions” because of the wording of the applicable pieces of legislation at the time, but the drafters would look at updating that expression in line with the new legislation since passed. Dependants also included posthumously born children and adopted children, and those who would have been legally entitled to maintenance if the deceased had not died.

She also noted that the changes included the deletion of the definition of “orphan” since this word would now be removed altogether from the legislation.

Section 12 provided for increases in pension amounts. In April each year, the Minister may, by notice in the Gazette, increase the benefits.

In relation to section 14A, dealing with reconsideration and allocation of benefits paid, Ms Williams indicated once again that the reference to orphans had been removed.

Ms Williams also noted that Members of the Committee had cited instances where false claims had been lodged, depriving the true beneficiaries of their rights. A proposal to amend section 30(2A) now provided for a specific offence, for a person who intentionally submitted a false claim for benefits. The penalty for this would be the same penalty as applied to fraud.

Ms P Daniels (ANC) noted the explanation about the purpose and effect of the legislation. However, she had a concern about the principles. She noted that the Military Pensions Act spoke to those who were entitled to pension, without mentioning their age. The Special Pensions Act had an age requirement. Many people, however, had been part of the struggle and establishment of the new order. Many of these people had not been above 35 years of age, or 30 after the amendments, and were thus excluded from benefiting. Surely they should only be required to prove their participation in the struggle.

The Chairperson asked for a concrete suggestion and sought confirmation that she was asking for age restrictions to be removed.

Ms Noluthando Mpikashe, Senior State Law Adviser, Office of the Chief State Law Adviser, spoke to the age issue. The first amendment to the Act had extended rights to those of 30 years of age, rather than 35. The rationale behind this Act was that a special pension should be provided to those of pensionable age. It was argued, at the time, that those who were under 35 years of age still had the opportunity to obtain employment and start contributing to a pension scheme that would take care of their needs when they reached pensionable age. The pensions applied retrospectively from 1 April 2001, back to April preceding the year in which the person turned 30 years old. The real concern was to cater for those who, due to their involvement in the struggle, were not in full time employment that would allow them to contribute to a pension scheme.

Ms Daniels responded that Members already knew of the background. This was called a “Special Pension”, and therefore applied to special circumstances. There was still a problem with the age restriction. The requirement that a person must prove their participation was known by the different organizations.

The Chairperson noted that Ms Daniels was of the view that the law was not serving its original intention, and therefore should be amended. He asked that OCSLA check the legality of the situation and change it if necessary.

Mr Montsitsi noted that the question of age had been debated five years ago, when the Special Pensions Act was amended. However, there was a need to adopt a rational approach. He noted that a cut off date of 1995 had been set. A person might claim to have participated in the struggle when he was a child, and that, to his mind, was unrealistic. The rationale behind the special pensions was to ensure that those who were not able to set aside pension money because they had not been working (and this assumed that they were therefore of working age) would be catered for. He said that it was necessary to set an age requirement, to ensure that those who were 20 in the 1970s or 1980s were able to benefit.

The Chairperson thought that the issue did not need to be debated in the meeting. Ms Daniels was suggesting that rather than setting a defined age, it would be preferable if the applicant merely be required to prove, beyond reasonable doubt, that s/he was fighting for the struggle at the time. He noted that there were people operating from inside, not necessarily child soldiers within the camps. It could well be that an 11-year old might have been orphaned and had nowhere else to go, and nothing to do, other than to join the struggle. If that person could prove this fact, s/he should benefit.

Ms Williams noted that OCSLA had set out the background to the age, but she did not think that there was anything legally preventing a proposal to amend the age. However, this could have an impact on the fiscus, and it would therefore need consultation with National Treasury. The drafters would look at preparing such an amendment.

The Chairperson said that this was an emotional issue. A commander of a unit could have been appointed as such at a very early age and it simply did not make sense that the commander was not now entitled to a pension, when the rest of the unit under her did.

Ms Daniels said that she did not believe the proposals for amendment of section 2 met the needs. She cited the example of two people who might have been part of the struggle in their individual capacity. Each of them should have been entitled to receive a pension, on their own accord. However, if they married, and one passed away, there was a deduction made of the lump sum of the deceased pensioner. She herself was receiving a pension from her deceased spouse, but if she had been receiving a pension herself, the lump sum of the deceased spouse would have been deducted. She agreed that whilst in principle, a survivor should not receive the monthly pension sum of both herself and her spouse, the lump sum was something different. This had led to the situation where some people were getting divorced to try to access their pension rights.

Co-Chairperson S Montsitsi (ANC, Gauteng) noted that the drafters had dealt with quite a number of the issues raised, and had corrected the situation of unintentional exclusions. He felt that the amendments addressed many of the former problematic areas.

Mr Montsitsi referred to the proposed amendments to section 2A. He noted that the deletion of “or” and addition of “surviving spouse and dependant” seemed to be correct. However, he then questioned why, in relation to section 14A, there was still reference to “surviving spouse or dependant”. He asked why this was worded as “or” and not “and”.

Ms Williams said, in answer to the apparent inconsistency, that “surviving spouse or dependant” was usually indicated where there was no surviving spouse, so it was optional. However, use of “surviving spouse and dependant” would indicate that both could benefit. She confirmed that the drafters would re-check to ensure that there was full consistency. Where there was a surviving spouse and surviving dependants, all should inherit.

Mr Montsitsi referred to the changes to section 6D(ii) and (iii), he questioned why there was still reference to an “orphan”.

Ms Williams thanked Mr Montsitsi for this comment, and said that this had been an oversight. The intention was indeed to remove all references to “orphan” from the revised legislation.

Mr S Esau (DA) questioned the penalty, citing that it was mentioned as R15 000 and R5 000.

Ms Williams clarified that the latest draft set out the R15 000 figure; the original penalty had been R5 000.

Mr Esau referred to section 14, which indicated that in addition to other benefits, a pensioner may also receive payments under the Military Assistance Act or the Social Assistance Act. He asked that it must be specified in the regulations that anything received under the Special Pensions Act must not be included when calculating eligibility under the means test. It was necessary for have consistency.

Ms Williams responded that it might be possible to provide for this in the schedule, but also in the regulations, to ensure that the Special Pensions amounts were to be excluded from the means test, if the Committee so wished.

The Chairperson asked that this be specifically included in the draft.

Mr Esau asked for confirmation that there would be no budgetary implications from the proposals on section 6D, when the survivor could qualify for 50% of the normal pension.

Ms Williams responded hat there would not be any additional cost to National Treasury. The same amount would be provided, but it would be divided differently.

The Chairperson referred to the proposals on section 30(2A), and wondered if the new offence could apply retrospectively, so that those who had committed fraud several years back could still be prosecuted. They had been responsible in some cases for major hardship.

Ms Williams said that the Constitution cautioned against retrospective application of offences. A person must be in a position to know whether the behaviour was against the law, because if that person knew that something was an offence, he would adjust his behaviour. The purpose of creating offences was to regulate conduct of citizens. However, she noted that there was already a common law offence of fraud, so that a person who had submitted a fraudulent claim prior to the Act being amended could still have been prosecuted under the Criminal Procedure Act. This new amendment could include a false claim, because the essence of that would be the giving of misleading information to the Board. It would be possible to prosecute, in future, under the new offence or the Criminal Procedure Act.

The Chairperson asked what exactly this offences clause was saying.

Ms Williams said that there were possible different scenarios linked to incorrect claims.  Person A could legitimately believe that she had a right to claim, and the information she submitted would be correct, and stated as such. Her claim would not be false, although it may have been based on mistaken information, and may not be valid under the Act. If the submission was done in good faith, Person A would not be prosecuted. However, Person B may, knowingly, submit a claim that contained false or misleading information, claiming that another individual was his father, when he knew this was not true. That was misleading, and could be prosecuted under this Act.

The Chairperson referred to the spouse receiving “a dependant’s share” and asked what exactly that meant. He asked if the spouse was receiving that share on behalf of a dependant, or for their own benefit. He also asked for clarification on how the distribution of benefits would happen in practice and if the guardian would be able to collect the money, and possibly misuse it.

Ms Williams answered that the proposals of section 5(2) were made in order to align with other legislation. If a person died intestate, his assets would be divided between the spouse and children in equal shares. However, in the Intestate Succession Act, there was provision that the Minister would determine the amount (currently R125 000) that must go to the spouse in these circumstances. She explained that if the estate was under R125 000 the spouse would get the full amount. If the estate was R250 000, the spouse would receive R125 000 and the children would share equally in the other R125 000. A surviving spouse could elect to take the same portion as the children (described as a child’s portion) or the larger surviving spouse’s share. This section would be using the same formula and the Minister would determine the amounts.

Ms Daniels pointed out that there was another problem with the current administration of the system. Some people who had later become integrated into the SANDF had been entitled to special pensions, and had been receiving them. They were contributing to the SANDF pension scheme. However, when they retired from the SANDF they were asked to repay their Special Pensions amount, or it would be deducted from the pensions they were now to receive from the SANDF. She did not think that this was correct, nor that it met the purpose of the Act. Their entitlement to the Special Pensions should be seen separately from their entitlement to other pension schemes to which they had contributed. Officials seemed to be doing their own thing.

The Chairperson said that this would need to be investigated.

Ms Williams confirmed that the drafters, when receiving the comments, would re-draft, and would also give a written response to the issues, to try to give effect to the Committee’s proposals, in a legal opinion.

Mr V Manzini (DA, Mpumalanga) said that some of those who would have been entitled to pensions had since died, and wondered how their cases would be dealt with.

A Member commented that, as stressed previously, this was supposed to be a special pension. The problem with it basically lay in how it was being administered. Many of the people affected were in dire need of the funds, but many had been excluded by corruption of officials. That needed to be corrected, although he was not sure how.

A Member agreed that it was important also to look at the history; a failure to consider what had happened before may result in people unwittingly promoting the past legacy. He thought that the issue of the boards, and how they were being constituted, needed closer consideration.

Ms Daniels agreed that there was a problem in the boards. She suggested that the board composition should include people from various organisations. This could help to redress the problem also of people submitting false information. At the moment, it was not known how many people were on the boards and their qualifications for the job. That would be needed in order to help Members to come up with information suggestions on the boards’ future composition.

Mr D Bloem (COPE, Free State) asked if, in the statutory forces, there had been a pension scheme for members of the South African Defence Force (SADF). He was sure that they would have been protected. He responded to Ms Williams’ question on who exactly he was referring to, that he was referring to all SADF forces, including those in the Bantustans, prior to 1994.

The Chairperson stressed that their pensions were related to their work in the SADF at the time, so they had been formally employed.

Mr Bloem asked for that to be confirmed in writing.

The Chairperson asked the drafters to try to factor in the issues that the Committee had expressed concern about, when coming up with their next draft. In respect of issues that may not be able to be included, such as the retrospectivity aspects, he suggested that a separate explanation be given.

Mr L Nzimande (ANC,KwaZulu Natal) asked if this had been formally tabled to Parliament; if so, then any amendments would have to be presented as a separate list.

The Chairperson said that it was still in draft, so it was possible to put any suggested changes directly into the new document.

Mr Montsitsi stressed that the most important issue was to ensure that all dependants were able to benefit, and that these changes were needed urgently. That was the reason why the legislation needed to be passed urgently.

Ms Williams confirmed that the draft that she had presented this morning would provide for the dependants, with no additional cost to Treasury. That would give effect to what Mr Montsitsi had stressed. However, the additional points raised on the eligibility for pensions would involve additional costs to National Treasury. She asked if the Members wanted the suggestions to be included in this Bill, pointing out that because of the cost implications, it could delay the process, or whether they wanted OCSLA to try to formulate another document to deal with them separately.

Mr Montsitsi confirmed that the draft containing the “basics” relating to dependants must be corrected and updated, taking into account comments raised on those.

The Chairperson confirmed this, but asked that in the meantime OCSLA also start preparing another amendment relating to the eligibility.

The meeting was adjourned.


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