GPAA 2022/23 Annual Performance

Meeting report

The Chairperson welcomed everyone to the meeting.

Apologies were read into the record.

The delegation from the Government Pensions Administration Agency (GPAA) was introduced to the Committee.

The Chairperson explained the context of this meeting. The Committee was expecting to process another bill today and this was reflected in the programme. Unfortunately, and not for the first time this year, either because the Standing Committee on Finance is overburdened with other work other than bills or it is somewhat slow in delivering bills, the bill is not ready to come before the Committee. This was established last Tuesday afternoon, so the following day he contacted the GPAA CEO to request this engagement. He was informed that the GPAA has a workshop scheduled for today and indicated that the meeting would be limited to just the previous annual report and quarterly report. To be fair to the entity, because of the late notification, the big issues did not have to arise here.

The Committee will meet with PIC in the next term.

He indicated that he will manage the meeting to take account of the workshop. They will endeavor to finish the meeting in one hour and 30 minutes. Any outstanding questions can be responded to in writing.

The Chairperson commented that there was something strange in the way Treasury operated. In his view, it was unconstitutional. In every other department, if you have an entity, it is accountable to Parliament directly. Parliament’s role is to ensure oversight over these entities but also oversight over the way Treasury is managing its own oversight responsibilities over these entities that are answerable to them. You can’t seek permission from the Minister or DG – which is unheard of – to see the participation of these entities. Parliament’s Legal Services also confirmed that no permission was needed from National Treasury.

There is a strange phenomenon where Treasury seems to think it has some sort of guardianship over entities answerable to Parliament. When he interacted with a Minister about this, he was told it was not to stop Parliament from interacting directly with the entities but it facilitates their participation and ensures they turn up. From what he can gather, National Treasury does not monitor their presentation and in his view, the entity would be foolish to be so subordinate to a Minister or DG.

The Chairperson added that if the Secretary wanted to go through Treasury’s parliamentary liaison officer, that was fine but he could not be expected to do so and it was wrong.

The Chairperson indicated that the Committee would also deal with two internal matters at the end: minutes and the Parliamentary Network Report.

Briefing by the Government Pensions Administration Agency (GPAA)

Ms Kedibone Madiehe, Chief Executive Officer, GPAA, and Mr Jay Morar, Acting Chief Financial Officer of the GPAA, made the presentation.

Overall performance for 2022/2023

Ms Madiehe indicated:

The GPAA has achieved 72% (18 out of 25 indicators) for Quarter 4 and 68% (17 out of 25 indicators) for Annual Performance. 

Membership: Total membership was 1 267 307 at the end of Quarter 4.

Member Contributions: Member contributions received for Quarter 4 were R20.97 billion.  

Pensioner Services:  The number of pensioners stood at 336 629 at the end of Quarter 4. This is an increase of 0.97% from 333 389 in Quarter 3.

Benefit Payments:  An overall 99.99% (443 052 out of 443 053) of new NT benefits (excluding Death benefits) were paid on time, and 93.40% (17 268 out of 18 488) of new GEPF benefits (excluding death benefits and cases that went to Unclaimed Benefits) were paid on time.  

Debt Collection:  The gross total of the debtors’ balance (including fraud debt) increased by 10.6% during the period ending Q4, from R 284.7 million on 31 March 2022, to R 314.9 million as at 31 March 2023. Redistribution Debt to the value of R 11 578 856 was raised during the period ending Q4. Redistribution debt accounts for 47.8% of the total Disallowance overpayments as at 31 March 2023.

Post-Retirement Medical Subsidies (PRMS): A decrease of 0.64% was experienced in the total membership from 148 529   in Quarter 3, to 147 568 in Quarter 4. An increase of 4.63% was experienced in the average amount paid per member from R2 498 in Quarter 3 to R2 614 in Quarter 4.

Military Pensions: There was a 0.02 % increase in the total membership for Military Pensions from 4 605 in Quarter 3, to 4 606 in Quarter 4. The total benefits paid amounting to R51.1 million, indicate an increase of 0.38% in the benefits paid in Quarter 4, from R 50.9 million in Quarter 3.

Human Resource matters: The number of GPAA employees stood at 1 051 as at 31 March 2023.  

Mr Morar assured the Committee that efforts were underway to improve the GPAA’s organisational performance for the 2023/24 financial year. He presented the 3 entity’s programmes, highlighting the indicators and performance of each target.

(See Presentation)

Discussion

Mr D Ryder (DA, Gauteng) said that he was surprised that the GPAA did not have many walk-in centres in Gauteng and the Western Cape (WC), given that the concentration of government employees is mostly in these provinces. He asked if this was because the GPAA noted that more people in those provinces engaged electronically.

He was pleased that many of the targets were accomplished. However, he was disappointed that the GPAA missed its target on the processing of death benefits (90% paid within sixty days) and encouraged the agency to improve on this going forward.

To maintain staff morale, he added, the GPAA needs to make clients’ benefits clear to them through calls.

The Chairperson highlighted that the Committee had received the presentation late.

Thereafter, he asked what strategy the GPAA had in place to achieve a clean audit, having failed to do so for the last five years; and how the strategy differed from the one outlined in its previous APP. Furthermore, he asked if this failure should not be viewed negatively.

After that, he asked what corrective measures were or have been put in place to address irregular expenditure at the GPAA; what was hindering the effectiveness of the current internal controls; and what consequence management will be implemented against those found to be involved. Moreover, he asked if the GPAA could provide the Committee with its detailed action plan to address this problem.

Given that the digitisation process is one of its strategic outcomes, he asked what measures the GPAA has put in place to ensure that this remains accessible to all clients.

Despite being pleased overall with the GPAA’s outcomes, particularly on its outreach programme, he was concerned that the presentation did not match the agency’s actual statistical performance.

Then, he asked what percentage of the employees were African and women.

He asked if the GPAA managed the largest number of pensioners in the country and if so, what percentage of them were from overseas.

While he understood the complexity involved in the governance of pensions, he was left disappointed by the 64% outcome across all strategic performances and he asked if this was seen as acceptable.

Following that, he asked if the Government Employees Pension Fund (GEPF) consulted with the GPAA on how it invests pension money. Moreover, he asked if the GPAA had a representative who attends the GEPF’s management meetings and vice versa; and what the degree of cooperation between the two was.

Ms Madiehe, on the digitisation process, mentioned that the GPAA utilises its outreach programmes and call centres to engage with people outside of the cities. Gauteng, KwaZulu-Natal (KZN), the Eastern Cape (EC) and the WC were the biggest sources of their membership. The GPAA has two offices in Gauteng, one in Johannesburg and the other in Pretoria, while the outreach services visit other areas in the province, like Soshanguve, Mamelodi, et cetera. The same applies with KZN, where it has offices in Durban and Pietermaritzburg, she said.

Regarding the question of whether the GPAA viewed its overall performance of 64% as acceptable, she pointed out that the performance related to the previous financial year. For the current financial year, the GPAA indicators show that a 6% increase presently stands at 70% for its performance. Certain targets had only fallen short marginally, with the GPAA achieving 90.8% instead of 92% for its employment equity target.

Mr Mongezi Mngqibisa, General Manager: Special, Military and other Pensions, GPAA, indicated that the main reason why the GPAA has been unable to achieve a clean audit is due to the irregular expenditure it has incurred. To achieve a clean audit, he explained, the GPAA will have to ensure that its internal controls and staff are capacitated. During the past financial year, the GPAA managed to improve on its performance audit and achieved the clean audit. What is remaining is to improve the quality of the annual financial statements (AFS).

Work has been done to improve the quality of the AFS and rid them of material misstatements. Further to that, the GPAA has tasked its internal audit with reviewing the AFS before they are submitted to the Auditor-General (AG), which has shown progress.

Corrective steps have been taken by the GPAA, for instance, it has terminated contracts awarded irregularly. One of the reasons this was done was to stop the continued expenditure on irregular contracts. Since the cancellation of many of the contracts, the GPAA has entered into other service-level agreements with other contractors, he outlined.

The GPAA has also reconstituted its supply chain management (SCM) structures, including the bid evaluation and bid adjudication committee, specifically their composition, as all transactions are done through both. This, he added, has strengthened the supply chain processes, with notable progress being made. Where an SCM irregularity is identified, it is placed on hold for evaluation. If it cannot be corrected, then the process will be cancelled and restarted, he added.

There are three other measures the GPAA has used to put a stop to irregular expenditure. One, it is in regular communication with the Office of the Chief Procurement Officer (CPO) to gain clarity on preventive measures for procurement. Two, the number of vacancies in SCM and the time taken to fill them in, because it has been working with contract workers. Three, it revised its standard operating procedures, which took into consideration the AG’s findings and recommendations. Similarly, there was a revision of the delegation of authority. This meant that there will be more engagement from senior management and oversight on the internal processes, he explained.

Despite the difficulties, the GPAA was confident that the benefits of the interventions would be seen in the next financial year, he highlighted.

Responding to the question on consequence management, he mentioned that in the requests for information submitted to the Office of the CPO, instances of consequence management implemented by the GPAA have been outlined, he said.

Ms Esti de Witt, General Manager: Legal Services, GPAA, mentioned that the executive committee of the GPAA met with that of the GEPF on a quarterly basis. While the agency did not have any representation or observation at the GEPF’s board of trustee meetings, it is permitted to present at certain committees.

Mr Morar, on why the GPAA had missed its targets for death benefits, indicated that the GPAA too was concerned by the issuing of death benefits. In terms of the Pension Fund Act (PFA), Section 7(c) allows for pension funds to pay benefits within a period of one year. This is a matter that the GPAA has raised with the GEPF as well.

At present, the GPAA is looking into how to improve the payment of the benefits, and also what new processes can be put in place to align it with the PFA and alleviate poverty by paying the beneficiaries. This process is presently underway and the agency hopes it will be finalised by the end of the financial year.

He agreed with the Committee that staff morale was important in the functioning of the call centre. The staff complement has been increased and a new system has been put in place to make them take calls more efficiently.

Referring to the question of what percentage of client beneficiaries were from outside the country, he indicated that just under 2000 clients were overseas pensioners. Previously pensioners had to post their documents to the GPAA but this has since been digitised, improving the response time.

On the composition of the staff, he mentioned that 63% of the staff complement is female, while 90% of staff members are black.

The Chairperson pointed out that he had asked about the percentage of African, Coloured and Indian in the staff, not how many ‘black’ people there were.

Mr Morar said that he did not have the information on hand and that the GPAA would have to submit that in writing.

The Chairperson explained that the term black could be deceptive in such issues as there may be an overrepresentation of one group over others. As such, he believed that it was important to provide a specific breakdown. What he found is that Coloured people are underrepresented in the public sector, whereas Indians are overrepresented. Nonetheless, he was pleased that the staff comprised 63% of women. He asked that the GPAA provide the information to the Committee by Friday.

Ms de Witt indicated that the GPAA did in fact have the statistics on hand. She outlined that 84% of the staff complement was African, 4.1% Coloured, 7% Indian and 9% white.

The Chairperson said that was reasonably representative.

Despite being pleased with the honest responses given by the officials from the GPAA, he wondered why irregular expenditure was allowed to continue for this long. He told the GPAA that it should expect to provide a report back on its progress on many of the matters discussed during the meeting in a scheduled sitting some time in late November or early December.

After that, he reminded Members that they had several bills in front of them, and will have to find space sometime in the year to complete the work. Those not passed will have to be handed to the next Parliament, he added.

Ms Madiehe indicated that the GPAA had strong governance structures. It has just started applying its combined assurance, which aims to further strengthen its governance structures. Resolving the irregular expenditure has required the GPAA to capacitate its staff through training and tightening internal controls, to avoid further deviation from policies.

The Chairperson mentioned that the Committee would move to its next agenda item, that being the concern raised by Mr Ryder on the Chairperson’s briefing to the Parliamentary Network on the World Bank and International Monetary Fund (IMF).

He explained that if a parliamentary chair is invited to present a paper in an external forum, he or she did not have to provide a report to a committee for its adoption, unlike when a committee has to attend a study tour.

The network, he explained, was formed in 2000 by a group of MPs in Europe who were concerned by the level of aid being provided to developing countries and the level of oversight that the latter had over the loans provided to them by both the World Bank and the IMF. Any MP in the member states of this body can apply to act as a representative.

He detailed that Mr Ryder had called for the Committee to vote on the report of his briefing to the forum. Continuing on this point, he indicated that he briefed the forum on the economic challenges faced by South Africa, particularly after Covid-19. The increase in global and economic fragmentation and the retreat of globalisation was a cause for concern, given the increasing inequality in the world, he added.

He suggested that in future the Committee should include three MPs for the visits to the forum, which occurs twice a year.

Mr Ryder asked why this matter had been referred to once more as it had already been discussed in private.

The Chairperson said that he provided the details to provide greater insight into the workings of the Forum.

Consideration and adoption of minutes for Tuesday 13 June 2023

The Committee Secretary took the Committee through the minutes.

Thereafter, the Chairperson requested a mover for the adoption of the minutes.

Mr Ryder moved for the adoption of the minutes.

Mr W Aucamp (DA, Northern Cape) seconded the mover for the adoption of the minutes.

The minutes were duly adopted.

Consideration and adoption of minutes for Wednesday 14 June 2023

The Committee Secretary took the Committee through the minutes.

Thereafter, the Chairperson requested a mover for the adoption of the minutes.

Ms M Mamaregane (ANC, Limpopo) moved for the adoption of the minutes.

Mr Ryder seconded the mover for the adoption of the minutes.

The minutes were duly adopted.

The meeting was adjourned.