National Macro Organisation of Government Report; Turnaround time for payment of pension fund for retired public servants; with Deputy Minister

Meeting report

Opening remarks

The Chairperson recalled the 2018 State of the Nation Address (SONA), which announced that government would embark on the National Macro Organisation of Government (NMOG) project to review and reduce government structures. The Public Service Commission (PSC) was tasked with monitoring and reporting the process, as mandated by section 196(4)(b) of the Constitution. The Committee would receive a presentation from the PSC on the process, after which there would be presentations from National Treasury (NT) and the Government Employees Pension Fund (GEPF) on the turnaround time of pension payments for retired public servants, as well as the challenges that were being encountered. He noted the complaints from the retirees about the delays in pension payments which had resulted in debt and loss of assets. He said that public servants, current or retired, had to be protected at all costs.

He congratulated Prof Somadoda Fikeni on his appointment as the chairperson of the PSC, and Ms Zukiswa Mqolomba as the Deputy Chairperson.

He invited Ms Chana Pilane-Majake, Deputy Minister of Public Service and Administration (DPSA), and Prof Fikeni to make introductory comments.

Deputy Minister Pilane-Majake congratulated Prof Somadoda Fikeni on his appointment, and said that the PSC did a lot of work on NMOG. They had a growing interest in the work of the PSC.

The Committee secretary, Mr Masixole Zibeko, said that Prof Fikeni was in the process of connecting to the meeting. The Chairperson apologised on Prof Fikeni’s behalf, as he had to leave after the PSC’s presentation to attend a meeting with the President. He asked the Committee to ask questions before Prof Fikeni and his staff had to leave.

The Deputy Minister interjected that she would not be available for the next presentation, and asked that her apology be recorded.

The Chairperson noted the apology and gave the floor to Prof Fikeni.

PSC performance, monitoring and evaluation on NMOG

Ms Mqolomba said the PSC's workstream one had been assigned responsibility to:

• Identify functions and conduct an analysis of the content of the functions to be transferred;
• Analyse the post establishment;
• Identify the posts/staff devoted to the affected functions;
• Identify and capture staff details in a schedule; 
• Develop a new macro-organisational structure for the affected departments (both the relinquishing and recipient departments);
• After concurrence of the new macro-organisational structure by the Ministry of Public Service and Administration (MPSA), ensure executive authority (EA)  approval of the structures of their departments

To facilitate implementation of the NMOG process, consultations had been undertaken with organised labour, resulting in Resolution 1 of 2019. 

The key elements of the resolution were the following: 

• Principles that govern the process: Compliance with Public Service Act, 1994 and the Public Service Regulations, 2016; relevant provisions of the Labour Relations Act; security of employment, ring-fencing and transfer of funded posts only, fairness, transparency and consensus in decision making, staff to follow function, contract staff to transfer with the same contract conditions, no automatic upgrades to higher positions, and no voluntary service packages (VSPs) should be considered under the NMOG process.
• Criteria for ring-fencing and transfer of staff: The separation of core functions must be guided by departments’ mandates and strategic plans; the incumbents of the posts must then be transferred to the recipient departments.
• Matching and placing criteria: Use job descriptions to match an employee to a post in a new structure; placement against a post at the same salary level; if function relates to two or more posts in the new structure, employee to be given an opportunity to choose the preferred post; if more than one employee’s job matches a particular post, the principle of seniority would apply first, followed by the relevant principles of the Employment Equity Act.
• Employees additional to the establishment:
  1. Employees who remain unmatched in a position in the new establishments be placed additional to the establishment.
  2. The employer should apply measures to facilitate and enhance redeployment, including training for these employees to meet the requirements of vacant positions.
  3. A list of all employees who were placed additional to the establishment would be created. Then all funded vacancies would be advertised and filled according to the reconstruction and stabilisation (R&S) processes of departments.

Department of Minerals and Energy

• Staff were matched and placed in terms of the criteria set in Public Service Coordinating Bargaining Council (PSCBC) Resolution 1 of 2019.
• 17 employees were declared in excess by the Department at the end of the Departmental Task Team (DTT) meeting, of which 11 were from the former Minister and Deputy Ministers’ offices, and six senior management services (SMS) personnel. There was clear communication with all excess employees on the way forward.
• Concerns raised by the Department were around the low staff morale of the excess staff, particularly the SMS members.
• Another concern was the cost of carrying the excess staff at a time when the Department was extremely under-capacitated with a huge mandate, and expected to play a vital role in the revival of the country’s economy.

Department of Agriculture, Land Reform and Rural Development

• The designing of the start-up organisational structure (SUOS) was limited to the realignment of the macro-organisational structure and excluded restructuring.
• The MPSA issued a letter of concurrence on the SUOS (SMS level) in November 2020, and the process to align micro-structures was undertaken.
• The DTT undertook the matching and placing staff in line with Resolution 1 of 2019 for the SMS. A total of 359 SMS members were matched and placed. 17 SMS members were declared in excess.
• No disputes had been lodged at the SMS level, and the matching and placing of lower level employees into microstructures was still underway.

Department of Communications and Digital Technologies 

• The SUOS was approved, and all the Department of Communications (DoC) and the Department of Telecommunications and Postal Services (DTPS) employees were transferred to the DCDT with effect from 1 April 2020.
• Seven employees could not be placed, and remained additional to the establishment.
• There was a process of reviewing the SUOS, and the Department intended to place these employees in the reviewed organisational structure. 
• No disputes were received during the NMOG process implementation in the Department.

Coordination

• Although DPSA noted certain weaknesses in meeting attendance and some structures working in silos, the process proceeded.
• Feedback from individual departments suggested good communication with the DPSA and the structures set up to implement the NMOG.  

Agreeing on selection criteria in advance, consultation and transparency

• All departments that responded to the PSC’s enquiry had staff that could not be placed and had been declared in excess and placed additional to the establishments.
• Processes were in place to deal with their placement
• It was remarkable that none of the departments had had to deal with formal grievances from affected employees and organised labour.
• This could only be due to the open and transparent process, principles put in place, and clear criteria followed in the process.

Lack of timeframes to place excess employees

• The DPSA issued a circular to all departments outlining a process to be followed when filling vacancies so that, where possible, employees on the excess list could be placed in those posts.
• This concern was informed by the existence of employees who were in permanent employment, but were placed additional to the establishment in a number of departments in the public service. Some of these employees came from previous reorganisation processes of government, and departmental restructuring processes over the years.  

Conclusion

• Affected departments had dealt with the matching and placing staff in line with the collective agreement, thus averting conflict and grievances.
• There were still a few staff members declared in excess and departments who had indicated that they were implementing initiatives to have them absorbed or placed in posts in those departments, or generally in the public service. 
• To this end, the PSC would continue to monitor the progress of the placement of employees who were still placed additional to the establishment.

Discussion

Ms M Kibi (ANC) asked if the NMOG had met its goals of reducing the size and number of government structures and the wage bill. What lessons could government learn from the project to ensure better decision making in the future? Were the staff transfers done in a way which did not bloat the receiving units with personnel, and further result in employees feeling underutilised and the development of low morale? She referred the 17 employees in excess in the Department of Minerals and Energy (which included11 excess employees from the Minister and Deputy Minister’s offices, and asked if the staffing contracts were not aligned with terms of office, as per the Ministerial Handbook. She asked what the nature of their contracts was. She enquired if the six excess senior managers were placed in other units or if they were seconded to other departments in the public service. In the Department of Agriculture, Land Reform and Rural Development (DALRRD), 17 SMS employees had been excessive -- what was the status of those members? She asked if there were plans to second them to other governmental departments if they met the requirements for the posts. Lastly, what were the excess employees doing daily since the completion of the matching?

Mr Z Mbhele (DA) said his questions were covered by Ms Kibi.

Ms T Mgweba (ANC) said that she too had been covered by those questions, but asked the PSC about an issue of timeframes in the circulars of the DPSA. How was accountability for the circulars ensured? As a matter of interest, she wanted to know how the PSC monitored the placement of the employees and those who were still placed in addition to the establishment. Lastly, she wanted to know if the PSC had communicated the status with affected employees during their monitoring processes.

Ms C Motsepe (EFF) said that all her questions were covered.

The Chairperson commented humorously that it was "a wonderful day!"

PSC’s response

Prof Fikeni asked the Committee to be mindful that the scope of their task was limited to personnel placement and related challenges they might have experienced. The intended effect of the project was out of the given scope, but it was an important point of discussion amongst members of the PSC and the DPSA. Reorganisations were intended to reduce costs regarding the wage bill and promote efficiency and effectiveness. He maintained that these needs were out of the scope, but it was an important question to follow the evaluation of the overall impact of the NMOG project. He said saving tended to be limited when one removed labour-intensive personnel such as teachers and nurses from the wage bill. He explained that if one looked at the “uncontrolled structuring of salaries and personnel costs” of local governments, the “productivity does not match the costs.”

Ms Mqolomba noted a reduction of ministries and departments being merged, making additional positions redundant. She explained that in other areas where two departments were merged, it could not have two chief financial officers, for example. The PSC called it a “nominal reduction,” because the difference was not great. At the end of the project, there were a few Directors-General (DGs) in the system which could not be placed in any of the newly created departments, because only one position existed. Those DGs would be used in different capacities until their contracts expired, which was considered part of the nominal reduction. She said that anyone else except for the DGs, who was not working on contract, was still in the system. She took DALRRD as an example, where employees worked in very different positions and specialised areas, and said such diverse roles were not easily collapsed into one. Hence some functions continued to exist in the newly created structures.

Ms Mqolomba said that because they had attempted a seamless service delivery transition, the staff reported to one senior manager, hence the excess senior personnel. Much effort had been put into grouping related functions under one leader, and her responses qualified the nominal reduction in size. She added that the size reduction was reflected in the number of ministerial advisors, while noting the limitations of advisory personnel appointments in the Ministerial Handbook.

She turned to the question on what government could learn from the project. She said that restructuring and reorganisational exercises must be done with genuine concern for the affected people’s careers. The staff gave their hearts and souls to serve the public and they should not be thrown out on the streets. She finished the thought by stating that the role of organised labour must ensure clear management of those processes. She spoke about the effects of the process, and said it would not be immediately apparent. For example, a size reduction of 1 000 to 998 would impact only service delivery and efficiency in the medium-to-long term. It was too early to conduct a study of the impact of NMOG, but there were isolated instances where the PSC had engaged with DALRRD in studies, and the reports would come to the Committee. These reports would display the departments' challenges when their functions were structurally separated.

She moved to the question of transferring staff without bloating units and functions, saying that they did not look into bloating with great detail, but her answer was still a “weak yes”. They recognised that certain specialised areas could not easily be collapsed into one, and they wanted to believe the bloating of functions resulted in low staff morale. She recalled how some departments had a so-called “start-up structure, " meaning they had no detailed restructuring process. Since NMOG took place over 12 to 14 months ago, everything needed to be done swiftly. She admitted that bringing together a vast range of departments with various legislations and alignments -- whilst managing labour relations -- was not easy. A proper assessment of the NMOG project should be done in three to four years, as anything sooner would not provide meaningful results.

She referred to the question of the 11 ministerial staff’s contracts being aligned with the minister’s term of office, noting that even before the revised version of the Ministerial Handbook (which had been renamed the Executive Handbook), many departments had permanent employees who were below the Chief of Staff level. Most of them were taken from a main function of a post and seconded to the ministry where, over time, they were absorbed into the ministry in a permanent position. This was done deliberately so that the support staff of ministries remained constant whilst ministers changed -- the departments' skills, expertise and understanding of governmental functions remained without totally overhauling the staff. Permanent staff moved to a department because they had applied for a promotion or a lateral transfer to diversify their skills. These employees were not linked with the terms of office of ministers. The chief of staff, and those in SMS positions, in ministerial offices were linked to the term of office of the ministry, which was why those employees were left in excess.

She said they did not have all the details about what had happened to the SMS personnel, and were waiting for a full report from the Government Procurement Services Agency (GPSA). She added that the only feedback the PSC had received was communication on where the personnel had been placed. They were aware of other departments using the excess list, and were awaiting the details of the reports those departments had submitted to the Bargaining Council on what had happened.

She went on to explain how low staff morale was linked to people being left, in addition to the establishment, sitting in unnamed portfolios. They lacked titles, but they were working, and the challenge was that they were used in an ad hoc manner. Because of this utilisation, the employees did not have a sense of career progression and long-term plans for their utilisation. These individuals were worried about their careers. They had spoken to one or two affected employee members who had already been placed. She noted the sensitivity of the subject based on previous experience, and commented on how, even if permanent employees were assured of their positions and salaries, insecure the staff felt. The distressed ones actively looked for placements, instead of waiting for departments to do so. She added that they did not speak to all the affected staff, as they did not want to raise expectations that they would provide a quick solution to their displacement. Moving forward, there would be a need to talk to those employees in a protected environment that would not further distress them.

Addressing the question on the DPSA Circular, she said that the PSC would engage them because there were no time limits given. She explained that the PSC wanted to fully understand how the DPSA played an active part in resolving excess employees.

GEPF on payment of benefits

Mr Musa Mabesa, Principal Executive Officer, Government Employees Pension Fund (GEPF), said that Ms Kgomotso Makhupola, chairperson of the Benefits and Administration Committee from the GEPF Board, would introduce the GEPF team. Mr Shahid Kahn, on behalf of the Government Pensions Administration Agency (GPAA), would follow to present the efforts the GEPF had taken to address the payment of benefits.

Ms Makhupola introduced various representatives of GEPF listed on slide two of the presentation, and apologised for the absence of members listed on slide three.

She said the GEPF was  Africa’s largest pension fund, established by the Government Employees Pension Law of 1996. It had 1 265 406 members, with 473 312 pensioners and spouse beneficiaries. Assets under management totalled R2.09 trillion.

The objective of the Fund was to provide pensions and other related benefits as determined in the GEP Law to members, pensioners, and their beneficiaries. The GEPF manages and administers pensions and related benefits on behalf of government employees in South Africa. It invests funds, pays monthly pensions, child pensions and spouse pensions, and also pays funeral and resignation benefits.

The executive authority was a board of trustees. Members and employers had equal representation on the board, with eight employer representatives, six employee representatives. one pensioner representative and one Forces representative. The board manages the Fund in terms of the powers and duties conferred upon it as per the GEP Law, and ensures the effective and efficient administration of the Fund and holds it accountable for the investment performance. 

Its administration function was outsourced to the Government Pensions Administration Agency (GPAA), and was governed through an administration agreement and service level agreement (SLA)

Ms Makhupola said GEP law required benefits to be paid within 60 days from the date of exit, and the SLA minimum target was for 90% of new retirees’ benefits to be paid within 45 calendar days. The stretch target was 99% of new retirees’ benefits to be paid within 60 calendar days. The Fund's performance in the fourth quarter of the past financial year had been 80% within 45 days, and 90% within 60 days. This had improved in the first quarter of this financial year to 87% within 45 days, and 92% within 60 days.

Among its initiatives, it had:

• Hosted retirement member workshops on a regular basis;
• Set up mobile offices to execute its outreach initiatives and ease the burden of engagement for members who were in remote or rural areas;
• Developed educational videos which explain how members should complete the required exit forms and detail all the documentation required when a member exits;
• Collaborated with the DPSA and the National School of Government (NSG) to develop a curriculum and course on the GEPF exit management process. The course was targeted at HR departments

The Chairperson asked if there was another presentation, or if he should open the floor for questions.

Mr Shahid Kahn, Chief Executive Officer  (CEO), GPAA, spoke up and asked that the presentation be displayed to the Committee.

Role of the GPAA

Mr Kahn said the GPAA was a government component, with a mandate to render pensions administration and other relevant services to the GEPF and the National Treasury (NT). Its customers were serviced in accordance with the administration and SLAs concluded by the GPAA with the GEPF and the NT. 

He described the process for the submission of exit claims by employer departments.

The GPAA received the exit claims from employer departments, which were submitted electronically. The GPAA’s client liaison officers trained the employer departments on the process to follow in submitting exit claims. The exit process was clearly defined, and all supporting documentation required was listed in the checklist that was part of the submission process. Control processes were in place on the submission platform to allow the employer department to capture and approve a claim before submission to the GPAA. Once claims were submitted to GPAA, the required process and controls as required within the GPAA were applied to finalise and pay the claim. If the claim was incorrect or incomplete, it was rejected and sent back to the employer department, requesting the appropriate information.

(For various retirement analyses, see tables on slides five to seven.)

Mr Khan described the challenges and mitigation strategies.

Challenge

Late submission of documents by employer departments leaves the members out of pocket.

Mitigation strategy

Increased awareness of turnaround times at employer departments. Active management of such cases.

Challenge

Incomplete submission of documents by employer departments.

Mitigation strategy

Implementing a gatekeeping model within the electronic submissions system would force departments to submit all relevant information prior to submission of a claim. The model would prevent incorrect/incomplete documents being submitted to the GPAA.

Challenge

Quality of data maintained by employer departments due to various reasons.

Mitigation strategy

The GPAA was looking at ways to proactively keep member data clean prior to the exit of a member.

Challenge

Rejected claim payments due to tax declines, bank rejections, etc.

Mitigation strategy

Members, upon retirement, move back to their rural homes or place of birth, where they may be unable to access the GEPF services. In these instances, the GPAA works with the employer departments or tries to trace these members using its existing infrastructure to pay these benefits.

Challenge

Current systems were not fully modernised.

Mitigation strategy

A process in place to fully modernise GPAA’s systems, which would enable the turnaround times of processing claims.

Mr Khan said the GPAA engages with the GEPF membership and employer departments through human resource forums, pre-retirement workshops, GEPF Days, mobile offices, letters to director generals, SMSs, E-mails, social media, client liaison officers (CLOs), GPAA’s other communication channels, GEPF self-service functionality and the GEPF website. 

The GPAA required the DPSA to enforce employer departments to submit claims accurately and timeously. Employer departments needed to encourage retirees to have their affairs in order prior to retirement to have a seamless transition into retirement.

Discussion

Ms Kibi noted that the GPAA mentioned if claims were incorrect or incomplete, they were rejected and sent back to the employer department. She asked if the system that managed claims was digital, or if most human resource management units used manual submissions. She asked what system the employer departments and pension agencies used to manage pensions, and if the system indicated an error to the employer department prior to submission. She asked about the 1 603 (of 9 595) claims that had been rejected and wanted to know the common reasons for the rejections. Did the pension agencies give the employer departments a timeframe to return rejected claims and prevent further delays, and were the retired employees informed of delays? She next referred to slide seven, where 454 employer departments had not submitted claims to the GPAA, and requested that in future the teams provide the Committee with the number of departments submitting incorrect claims. She also asked what interventions the agency provided to struggling departments that were unable to submit the correct claims.

Mr Mbhele noted that the GPAA presentation had focused on the administration challenges of what sounded like an enormous operation. It was a very complicated and ongoing project, and he appreciated the administrators and support staff who kept the process going. He asked if the GPAA observed any best practices, particularly in administration. He questioned whether the size of the departments made a difference in how effective they were at assisting retiring and retired employees with paperwork -- was a smaller department more effective, or was a larger number of competent people better? He asked if there were any differences between rural and urban provinces, and requested details of where things were going well, why they tended to go well and what the factors, features and drivers were. He finished by stating that if best practices and models were clarified, that kind of information could be shared and replicated to improve overall performance.

Ms M Ntuli (ANC) said that Ms Kibi covered her questions on delays, because, to her, it seemed to be the norm for government pensioners to go long periods without their pensions. She asked whether the scheme was compulsory or not. Commenting on the mobile offices that gave people in rural areas access to information, she asked whether the offices were stationed in one place in a province, or if they moved between districts to make it easier for pensioners.

Ms Motsepe asked for the exact recourse for late payments, but lost connection due to bad network connectivity.

GPAA's response

Mr Jayanti Morar, General Manager of Operations & Finance, GPAA, answered the question on whether the submission systems were manual or electronic. He responded that it was electronic, and 95% of the claims were received electronically. He compared the system to the South African Revenue Service (SARS) eFiling system, where one captured information on the system and attached the supporting documentation before submitting. He explained that there were capturer-and verifier-processes within the employer department, and that those roles were to be fulfilled before submitting anything to the GPAA.

He responded to the question on whether the system indicated incomplete/incorrect claims, and said that upon submission, the information was reviewed against a checklist (which was also provided to the employer department) and supporting documentation, such as services rendered, salary, etc. If any pieces of information were not present, the claim would be rejected and reasons would be conveyed. A common rejection reason would be that the salary information the employee department supplied did not match what the GPAA received. He said the GPAA had this information because they receive payroll information from the state PERSAL payroll system, which DPSA and National Treasury managed. He explained that each employee working in the government sector would be registered on the PERSAL system. Another example of a rejection reason was missing documents, or attachments like payroll printouts or contract information.

He moved on to the question of providing a timeline once a claim was rejected. He said they could not provide timelines, because it was the employer department’s responsibility to correct any reported errors. He said that they did communicate rejection reasons via SMSs with the pensioner once their claim had been sent back.

Regarding which departments submitted manually, he said a small percentage of departments did not submit electronically due to a lack of infrastructure. The GPAA extended to regional offices where computers were set up for employer departments to capture information and submit electronically.

The issue raised on interventions was attended to next. Mr Morar said that around 80 client liaison officers throughout the country visited employee departments and taught human resources (HR) units about pensions and understanding GEPF laws and rules, and how to apply them. The teams also taught individuals how to process claims onto the system and where technical difficulties may arise.

He answered the question on slide number seven, where 5 708 retirements were the total number of claims at the end of August, and only 2 360 claims had remained with the GPAA, and not all of them were within 60 days. He explained that another 257 of the 5 708 claims could not be paid as they were future-dated. He commented that those future claims proved that the outreach programmes with the GEPF helped people to understand the importance of completing retirement claims in advance. The Department could process claims only when the exit date arrived, so the processing could happen in the month concerned.

He said that the GEPF and GPAA had worked around best practices and understood issues surrounding the employee departments at the provincial and national levels. These confirmed that pension matters dealt with on a centralised basis had greater challenges than a decentralised system. The South African Police Service (SAPS) was an example -- they were a centralised service, so claims from all over the country were processed and then submitted to GPAA.

He said they worked together with the DPSA to supply departments with information leaflets and pension guides to empower them to do the right thing moving forward.

Responding to the question on any trends concerning rural versus urban areas, they did recognise that larger provinces had the majority of the members in the rural areas, and more challenges were experienced there. That was why they would have more than one mobile office to give areas the appropriate attention they required.

He answered the question on the schemes being compulsory by saying that if a person was a government employee, they had no choice in pension matters -- all employees were required to join the GEPF as their pension vehicle.

He said the mobile offices roster was made available on the GEPF website, and an area would be informed one to two months prior. The same information was conveyed via posters and radio stations. They would spend two or three days in particular areas to allow members to come to the offices.

The meeting was adjourned.