Johannesburg Stock Exchange; Special Pension Fund Board

Meeting report

FINANCE PORTFOLIO COMMITTEE
3 April 2001
JOHANNESBURG AND LONDON STOCK EXCHANGE DEAL; SPECIAL PENSION FUND BOARD

Chairperson: Ms. B. Hogan (ANC)

Documents handout
Special Pension Fund briefing
New Business Association between the JSE Securities Exchange South Africa and London Stock Exchange

SUMMARY
The Deputy Minister of Finance gave a progress report on the Special Pension Fund which should complete processing of applications by the end of the year as it now had full-time Board members. The qualifying age for applicants may be revised as the 'Young Lions' of the struggle may be excluded in some instances despite having served more than five years.

The deal between the Johannesburg Stock Exchange and the London Stock Exchange was discussed. Areas focused on were Listings, Membership, Information Dissemination and Technology.

MINUTES
Special Pension Fund Board
The Deputy Minister, Dr Mpahlwa, stated that the Board of the Special Pension Fund has been grappling with varied problems from the inception of the fund. Their major concern has been the possibility of fraud by applicants and also the interpretation of the Act. There have been different interpretations of the Act which has led to uncertainty.

Last year Cabinet approved the Board's request that if applications lack back-up documentation, sworn affidavits can be provided by the applicants in case of doubt. The Fund has managed to beef up their administrative support. The process of finalising all applications will be finished by the end of this year. The Board has full-time members for the first time and they have undergone training and induction. The Minister acknowledged that last year they made a commitment to the Committee that the Board would make bi-monthly reports but this has never materialised. For this the Deputy Minister accepted full responsibility. See document for full details of presentation.

Discussion
Mr B Turok ( ANC ) asked about the division of labour amongst Board members and its administrative staff. He noted that he himself was the victim of injustices and had applied for the pension which was finally granted after too many hurdles which he ascribed to inefficiency and maladministration. He concluded by saying that one had not joined the struggle in order to be compensated.

The Deputy Minister acknowledged that there were administrative problems, such as files getting lost. Also people who were appointed were often political appointees without the required expertise. He further acknowledged that applications for these grants should be fully processed by administrative officials so that by the time it reaches the Board, a recommendation can be made. The file should not have to be sent back for further information. In the past there was no proper division of labour regarding this. However now working relations between the administrative arm and the Board members has improved.

Ms Hogan said certain aspects of the Act have to be satisfied before any approval can made. For instance if there are eight criteria which have to be met and only seven have been met, can the Board not exercise its discretion in approving the application.

Mr T Magwaza replied that the Act does allow one to apply one's mind and overlook certain deficiencies. Before the clean-up, it was everybody's task to verify information on applicants - now this is solely the duty of the Chief Executive Officer.

Professor Turok asked why they need board members on a full-time basis to assess the files. He said that the committee was not satisfied at all about that.

The Deputy Minister answered that there are many problems which need to be attended to. The contract for the board members is only for a year - this gives them the best possible chance to process all the applications and justifies the need to have some board members on a full-time basis.

Mr T Mofokeng (ANC) asked whether it is justified that the fund has had a 100% increase in administrative costs. He wanted to know how many applicants have been paid already compared to the budget. Ms. Hogan added that more money has been paid to outside consultants, that is, the National Benefits Consultants.

Mr Magwaza replied that it was an inherent requirement of the Act that an actuary should be employed on part-time basis and in 1999 when the old Board members left, it was NBS who had to collect information. As a result the budget had to increase.

Dr. Rabie (NNP) asked Board members to be more specific on the aspects of the Act that were uncertain. He commented that he felt that there was a fair degree of procrastination on the part of the administrative arm of the fund.

The Deputy Minister said that there were many examples of such uncertainties in the Act. He cited an example of a person who had suffered a disability in the course of the struggle. However the Act specifies that the disability has to be 100% before it can be admitted as a disability. Another problem is whole question of age. The Act states that people who were under the age 35 on the 1 Dec 1996 do not qualify for the pension. They must have served their political organisation for at least five years. The issue is that some may have the necessary experience but not qualify in terms of age and have been rejected by the Board. They had received angry letters in this respect because applicants claim that during the course of the struggle they have been regarded as heroes; but now they are regarded as kids who cannot receive benefits. This needed to be looked at or amended.

Dr Pheko endorsed the position saying that during the liberation struggle there was no age limit and it was the young people who were in the battle fields. This needed to be rectified.

The Deputy Minister said there will be a meeting on the 4 April 2001 between Board members and State Law Advisors and he asked the Finance Portfolio Committee to make submissions regarding this.

Mr Taabe (ANC) asked what the Board's view is on new applications, especially for people from rural areas who are not well informed about cut-off dates.

Mr Magwaza said only the Review Board can condone late applications. It has full authority on that.

The Deputy Minister said the committee must spend some time in Pretoria in order to familiarize itself with issues the Board is grappling with presently. All matters raised with it, the Ministry will report back to the committee soon.

Mr Mofokeng asked how much has been spent to effect the payments.

Mr Magwaza replied that only the Finance Ministry makes the payments but he promised to investigate and bring the exact amount.

In conclusion, the Minister emphasised that people are not being paid for participating in the struggle but to provide for lost opportunities in doing this.

Johannesburg Stock Exchange
Ms N King made the presentation (see document provided)

Mr K. Andrews asked what is the difference between primary and secondary listing and what are the benefits beside gaining access to FTSE 100. See document provided.

Dr. Davies from the ANC asked whether countries such as SA which is regarded as an emerging market could enter into an alliance with the London Stock Exchange and what are the implications.