Pensions for Members of Non-Statutory Forces: briefing; Special Pensions Amendment Bill: adoption

Should full service history of former NSF members be recognised, without any expected employee contribution, the state would be responsible for the full cost. He explained that this measure would ensure that former NSF and SANDF members are at full parity. He continued that the other scenario is that should the proportionate recognition of service be applied, full parity can only be achieved for former NSF members with more than 20 year of service.

Mr Bernard explained that in all scenarios where a member contribution is expected and where members elect not to contribute, this would result in a disparity with SANDF members that increases as the expected member contribution rate picks up. He pointed out that the impact of the NSF members not making full or partial own contribution increases the disparity, as the member grows older. He noted that a level percentage of between 60% and 70% would result in a cost to the employer similar to that under a scenario with employee contribution is 7.5%. He added that a level percentage of approximately 74% would be needed to ensure that all members received at least the same level of service recognition as would be the case where an employee chose not to contribute.

Discussion

The Chair sought clarity on whether the different scenarios show the cost that would be born by the other party where the government makes its contribution.

Mr Bernard replied in the affirmative noting that the rate of contribution would be different under each presented scenario.

Ms Taljaard (DA) wanted to know why the possible additional numbers were difficult to determine. Why was it difficult to quantify how many people the Bill envisages would benefit from the scheme - noting that this would make a difference right across the two scenarios.

Mr Bernard said that the DOD had undertaken an extensive exercise to try and uncover who these people were and to get information on them noting that this is why there is the accurate figure of 21 000. However the DOD had no data on how many would qualify from the SAPS or the NIA and that these sectors have not assisted in providing the relevant data on such people.

The Chair inquired about members who were part of the NSF and who then joined Departments other than the NIA or police force.

Brig. Gen. de Wet replied in the affirmative noting that all those who were in the non-statutory forces qualify irrespective of their current station in life.

The Chair pointed out that there were non-statutory force members who, for example, joined the Department of Education, where they already had a pension buy-back dispensation and they had taken advantage of this, would they then qualify for this plan.

Ms Verkuli (Special Pensions Administration) replied that they would not be able to buy back all of their service, so they would be able to buy-back the NSF service as well.

The Chair wanted to know what exactly such people were buying back.

Mr. Magwaza noted that a formula is used to determine buy-backs. The person in the above example can buy-back service through the Government Employees Pension Fund (GEPF). but the rate might be higher, therefore it would be advantageous for them to be catered for in this Bill.

Brig. Gen. de Wet took members back to the time of integration process where each non-statutory force member had basically two options at the time of the exercise. One was either to integrate with the regular forces or take a de-mobilisation grant. The figure for the latter now stands at 9 700. He pointed out that the Integration Bill has already been passed by Parliament and that the 9 700 members are potentially in various government departments and the private sector.

Col. H M Zobane (Senior Staff Officer: DOD) pointed out that all the former NSF members who joined the public service were provided for and that even in the definition provision is made for such an NSF member. Such a member is not necessarily part of the security forces but is in the public service and the legislation caters for them as potential beneficiaries.

The Chair said that what is coming out clearly is the fact that the 9 700 members who opted for demobilisation could still be in the public service.

Brig. Gen. de Wet confirmed this. He noted that the 21 000 people that were integrated are part of the Defence Force package. This group is part of the calculation which the Bill targets with the figure of R 501 million shown in Scenario 5 but the 9 700 demobilised people are not. And that is why varying figures of 3000, 6000 and 9000 are used.

Dr Koornhof (UDM) noted that there were certain members who served in the military on a contract basis such as the members of the Cape Corps. He wondered why this cadre of personnel is not included anywhere in the figures that have been presented to the Committee.

The Chair said that this issue had been previously discussed in the Committee but Dr Koornhof was not present then. She asked Brig. Gen. de Wet to bring Dr Koornhof on board regarding the matter.

Brig. Gen. de Wet explained that the cadre referred to is not included because they are not considered as part of the non-statutory forces.

Ms Taljaard observed that members' contribution is significantly high and that this aspect immediately raises the question of affordability.

The Chair clarified that it is not the matter of individual contribution but that more people would be in the net when the scheme is up and running.

Brig. Gen. de Wet confirmed that the Chair's remarks are correct and noted that members who joined the statutory forces pre-1990 would be included whilst those who joined after 1990 would not but that under the 100% scenario they would be included. He said that it is a matter of additional members noting that the younger members would be paying more since they would be able to put in more years of service.

Ms Joemat (ANC) wanted to know whether the 100% applies across the board or is dependent on the year of joining the statutory forces.

Mr Bernard replied that the 100% would apply across the board since those who served in the pre-1990 forces are considered to be on the same level as those who were serving in the statutory forces then. He explained that the reduction would only vary on the years of service.

The Chair stated that one of the principle concerns of the Committee was to ensure that there was a reasonable degree of equity between the SANDF and NSF members. Secondly, that there is a degree of equity between all SF members. Thirdly, that those members that are due to retire soon would not suffer as severe a disadvantage, and their needs above all be catered for. Equity and parity should be the guiding principle for the completion of this exercise. She noted that although scenario 5 appears to be addressing the later issue, it was not necessarily the case that it worked.

Mr. Bernard responded that there was only an 8% difference between group A and B, if they contributed, but a larger disparity created for all groups, if the members decided not to contribute.

Brig. Gen. de Wet said that the DOD has always pushed for 100% parity but the question all along has been: from where do funds come as Treasury had given a ceiling beyond which they could not go. He however confirmed that the DOD is under a strict mandate to ensure as much parity as would be practical.

Mr Hanekom (ANC) sought clarity on the nature of parity the DOD was talking about.

The Chair explained that there were two types of parity namely: on the one hand provision is made for all members in the statutory forces to be dealt with equally and on the other hand that all members should be entitled to the same pension.

Mr Hanekom was of the view that if that be the two types of parity at issue then there is very clear understandable moral rationale to opt for Scenario Five rather than One where one who had just joined the SANDF in the 1990 and would be entitled to 100% benefit.

The Chair said that what is outstanding is the question of what a member would be allowed to buy back.

Mr Bernard replied that members have always had the option to purchase service on the standard terms noting that this option under GPEF rules is easier.

Ms Taljaard said that from the deliberations it is clear that the parity discussed about would indeed result in disparity and she asked members to focus on this.

Brig. Gen. de Wet clarified that the kind of parity alluded to here is that between the former non-statutory members of the SANDF and the statutory ones - noting that the DOD is keen to ensure parity as much as possible.

The Chair observed that what put a lid on the DOD's efforts to achieve parity is monetary limitations. Brig. Gen. de Wet concurred.

Ms Taljaard wanted to know who would fund the scheme.

Brig. Gen. de Wet replied that payment would be made from the pension fund where there is dual contribution.

The Chair said that she has been made to understand that the union has rejected the proposed formula and that they prefer equity across the board.

Brig. Gen. de Wet confirmed that indeed the unions have disputed the computation and that discussions around the issue are still on the table.

The Chair then pointed out that all these issues would have to be referred back to the Bargaining Council. She said that although Parliament is vested with the authority to override the input of the Council, the time was not right to set such a precedent noting that collective agreements are reached in good faith and it would be unfair to vary such an understanding.

The Chair pointed out that members would certainly need more information on the various scenarios before they can take position on the matter. She asked the Department to convey to the Minister the members' strong view on the issue of parity amongst the statutory and non-statutory members.

Special Pensions Amendment Bill: deliberations

Mr. T Magwaza (CEO of Special Pensions Administration) and his assistant Mr L Macjerry presented the Powerpoint presentation on this Bill (see document).

The Chair explained that the Pensions Administration Bill had undergone a review that was due to be presented to Cabinet. The Special Pensions Amendment Bill before them was a minor amending Bill to align it with the Government Employees Pension Law. The purpose was both to align this Bill and bring in emergency technical amendments that would allow for the Special Pensions Administration to continue with their work on the overall Bill.

She, however, noted that the Special Pension Amendment Bill that is before the Committee does not include amendments arising after the special pension dispensation review. She asked members to pass this Bill that would enable the Special Pension Administration to continue its work while awaiting the review Bill that would come to the Committee later.

The Chair noted that there had been a question as to whether Parliament was vested with the competence to alter a public bargain agreement but that this position was explained to the Committee at the earlier meeting. However it has been brought to her attention that a trade union within the SANDF has lodged an objection to the Cabinet-approved formula and there has been in-depth, urgent deliberations on the actual bargain agreement, which she pointed out was not within the terrain of the Committee. The Committee would be hesitant to pass the pension law until it is briefed on the development regarding the bargain agreement.