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FINANCE PORTFOLIO COMMITTEE
12 August 2005
SPECIAL PENSIONS AMENDMENT BILL: TREASURY BRIEFING
Acting Chairperson: Mr K Moloto (ANC)
Documents handed out:
FINANCE PORTFOLIO COMMITTEE
The Committee heard a presentation from the Special Pensions Administration of the National Treasury on the Special Pensions Amendment Bill. Central issues included increasing benefits to surviving dependants from a lump sum only, to a monthly payment as well; alignment of the pension fund with other government pension funds (GPF), and resolving administrative/legal difficulties experienced in the implementation of the Act. A certified Bill would be presented to the Committee by 24 August 2005 at the latest.
Special Pensions Administration presentation
Mr D Jurgens (CEO of the Special Pensions Administration: National Treasury) presented on the Special Pensions Amendment Bill, that proposed amendments to the Special Pensions Act. At 31 July 2005, 36 328 applications had been received, of which 15 318 applicants had been approved.
A financial summary of the fund indicated that benefits paid out amounted to R1.57 billion and that operational expenditure amounted to R58 million. Operational issues included winding up the Special Pensions operations; integrating the administration and staff into the Government Employees Pension Fund (GEPF); reducing the backlog of review cases, and externally reviewing the application, adjudication and payments process.
Proposed Amendments included lapsing Part 1 of Chapter 1. This would mean the closing date for new late applications would be 31 March 2006. Incorporation of a monthly pension for surviving dependants and disestablishment of the Board and Review Board would be 60 days and 90 days respectively after the lapsing of Part 1 of Chapter 1.
Mr Davidson requested reasons for the high number of application rejections and said that the closing date for applications was too early. He asked if there was time for appeals after the closing date of 31 March 2006.
Mr D Jurgens (CEO Special Pensions) replied that applicants often did not meet the qualification criteria and that sufficient proof had to be offered to justify application acceptance. Mr D Jurgens indicated that appeals would be assessed after the 31 March 2006.
Mr M Johnson (ANC) asked to what extent the process is free of difficulty and if there was sufficient staff. He also requested clarification of the operational issues. Mr D Jurgens replied that the process had been outsourced to ensure that operations ran smoothly and that there were some staffing shortages but that they were manageable.
Ms J Fubbs (ANC) requested an extension to the age of orphans when benefits cease. Mr D Jurgens replied that the task was to align the Special Pensions fund with other government schemes and that the fund was looking at the issue.
Ms B Hogan (ANC) stated that a successful applicant had to be fully disabled under the Acts guidelines and that this was perhaps too stringent and needed revision. Ms J Ferreira (Director: Legislative Services) replied that the definition was not as rigid as Ms Hogan implied and that there was leeway in application assessment.
Mr B Mnguni (ANC) asked if the deceased's dependants get 50% of original payment or the actuarial value. Ms Ferreira replied that dependants would receive a lump sum and a monthly payment of 50% of what the original recipient received.
Mr Y Bhamjee (ANC) asked when a certified bill would be presented before the Committee and stated that this would clarify the timeline for the amendment process. Ms Ferreira replied that a certified bill would be presented by 24 August 2005 at the latest.
Ms J Fubbs (ANC) requested information about the proposed media campaign to inform the public about the Amendment. Mr L Wort (Treasury) replied that the media campaign aimed to reach rural areas specifically and that the onus was on government to ensure its effectiveness. Media outlets included radio advertisements, press releases and TV advertisements. He stressed the importance of involving stakeholder organisations at the centralised level.
Mr Davidson asked if the anticipated average costs would fall below the current operational expenses of 4% once integration with other government funds had been achieved. He also queried the Acts definition of people who had made sacrifices and asked how the Act was applied in practice as this would have financial implications.
Mr J Moloketi (Deputy Finance Minister) replied that the Special Pensions Fund was supposed to support people who had fought apartheid with the ANC, PAC, and APO. Mr Moloketi indicated that the bulk of potential claimants were already covered by the system and that he did not see any major problems. Mr L Wort said that integration with the broader GEPF would allow for economies of scale and that anticipated costs would fall to 1%.
The session was adjourned.