Non–Statutory Forces Pension Fund: briefings by Department of Defence & Government Employee Pension Fund

JOINT STANDING COMMITTEE ON DEFENCE
4 May 2007
NON–STATUTORY FORCES PENSION FUND: BRIEFINGS BY DEPARTMENT OF DEFENCE AND GOVERNMENT EMPLOYEE PENSION FUND

Chairperson: Mr S Montsitsi (ANC)

Documents handed out:
SANDF Presentation on Non-Statutory Force Pension Fund
GEPF Presentation on Non-Statutory Force Pension Fund

Audio Recording of the Meeting

SUMMARY
The Committee was briefed by The Department of Defence and The Government Employee Pension Fund on the progress and current situation of the Non–Statutory Forces Pension Fund. The financial mechanisms of the fund were outlined as well as its implementation. A major point of contention was that veterans needed to buy into the pension scheme, similar to standard pension fund practice, but that this was causing great hardship. The Committee felt that it was unfair that NSF members were forced to pay money in order to be eligible. The Department and Pension Fund agreed, but highlighted that they served a purely administrative function. The need for political intervention was stressed and the Committee resolved to hold public hearings on the matter, which would allow the Committee then to formulate a plan how best to amend the legislation in order to effect a more equitable system.

MINUTES
Non Statutory Forces Pension Fund: Department of Defence (DoD) Briefing
Lt Gen Temba Matanzima, Chief Human Resources, South African National Defence Force (SANDF) apologised that the Secretary General could not being present.

Major Gen Andrew Masondo, Chief: Corporate Communciation, DoD,  tabled the demographics of the SANDF for the period 2000 -2007. Of note was the over-representation of whites from the Staff Sergeant rank upwards. The ratio of blacks to whites was approximately 19:6. Public Service Act Personnel (PSAP) and South African Military Health Service (SAMHS) exhibited an equal ratio of male to female employees. Gen Masondo then outlined the mechanism in place to distribute the Non- Statutory Force Pension Fund (NSFPF). There was a disparity between former non statutory and former statutory force members in regard to pension benefits. Each was defined, and it was noted that the Non Statutory Fund (NSF) Pension Project was established to implement the administration of the pension benefits. Those who did and did not qualify were set out. Some veterans would have to pay back the Special Pension Fund (SPF), as well as make a member’s contribution to the fund, before being eligible to receive the NSFPF. The costs of buy-in were detailed. The internal challenges of implementation were also outlined. These included members without valid addresses. There were around 569 living and 318 deceased members but Department of Home Affairs had been unable to assist much. There were 3 057 joining date disputes, of which 706 had been resolved.

Lt Gen Matanzima reiterated these issues and stated that the DoD was in constant consultation with the Department of Public Services and Administration (DPSA). He welcomed any assistance that could be rendered from the Committee. He set out the possibilities for alternative schemes.

Gen Nompi Mahlangu, Director Military Veteran Affairs, DoD, outlined the Military Veterans’ Affairs Administration component of the presentation. This was aimed at destitute veterans and training linked to employment. The background and the different projects were outlined. The Directorate had been established by the Military Veterans Act of 1999. International sponsors included China and Germany. Local sponsors were various national departments.

Brig Gen (ret) Q Painter, Deputy Chief, Service Corps, DoD, outlined various Service Corps assisted projects for veterans and provided a comprehensive list of the projects. Exiting members of the corps could apply for any SAQA compliant course at any institution close to their residence, or apply for distance learning facilities. R13 000 per individual had been budgeted and theref were 322 skills offered. There were currently 153 training providers. The total budget for 2007 was R52,4 million. There had been under spending in the last three financial years. 

Discussion
The Chairperson asked for clarity on the command structure of the SANDF.

Lt Gen Matanzima tabled the structure. He stated that the SANDF was led by Gen Godfrey Ngwenya and that the respective heads of each wing sit with him on the Military Command Council. The Heads of each service in turn had a council structure with heads of formations within each wing of the military.

Mr J Schippers (ANC) asked whether there was a time limit for the phasing out of transformation based on colour as opposed to capability.

Lt Gen Matanzima responded that the Department was guided by legislation and as currently still addressing the demographic imbalances in middle management. Once this was complete the Department would be guided by the Minister.

Mr L Diale (ANC) asked about the imbalance of women in the armed forces.

Dr Mary Ledwaba, Chief Director: HR Policy & Planning, SANDF responded that there was a strategy to increase women in the force.

Maj Gen (Prof) Solly Mollo Chief Director, Human Resource Management, SANDF added that the SANDF had the problem of competing with industry.

The Chairperson stated that the Committee did interact with members of the force and that the main sentiment picked up was the problem of upward mobility, especially with regard to white middle management. The problem of incentives was also alluded to.

Dr Ledwaba replied that initiation of the equal opportunities directive, headed by a woman, was in operation to address the problem, and seemed to be having some success.

Mr Schippers asked about reduction of force numbers from 77,000 to 70,000. Where there had been attrition, he questioned how the posts left vacant by 28,000 individuals were filled.

Gen Masondo stated that the SANDF was trying to decrease its numbers.

Dr Ledwaba replied that the figure of 70,000 included DoD personnel. She added that the Military Skills Development (MSD) campaign, coupled with the White Paper would increase the number to 85,000. The vacancies were filled in terms of representivity and experience.

Maj Gen Mollo added that when this figure was decided upon it had excluded peace-keeping operations and that the figure would have to increase.

The Chairperson asked about the disparity in benefits between ex–SADF members’ and NSF members’ pensions. He asked what the exit mechanism was.

Dr Ledwaba replied that she did not have these statistics, but could provide them to the Committee. She noted that the exit mechanism was voluntary.

Mr Schippers asked about the creation of a department tasked solely with governing military veterans’ issues. He also questioned the role of the PW Botha Bursary Fund as a local sponsor of Service Corps projects.

The Chairperson asked whether the Service Corps projects were owned by the veterans and asked how well they were doing.

Lt Gen Matanzima replied that initially the DoD created a small directorate to deal with veterans’ issues, but that it became swamped with side issues. He welcomed the suggestion and stated that most other countries did have departments or agencies to deal with these issues, and in this regard a report was submitted that was still being evaluated. He stated that he would follow up on this issue, but that a report from the Committee would help the effort greatly.

Maj Gen Mollo replied that the PW Botha Bursary Fund was created for ex- SADF members.

Gen Mahlangu added that there were plans to amalgamate the NSF Fund with the PW Botha Bursary Fund.

The Chairperson felt that the disparity between ex-SADF members and NSF members had not been addressed and asked for Treasury to explain further.

 Government Employee Pension Fund (GEPF) Briefing
Mr Phineas Tjie, CEO, GEPF, stated that much of the same ground had already been covered in the previous presentation so he would not repeat himself. He stated that initially the NSFPF was not solely about addressing the disparity between former South African Defence Force (SADF) veterans and NSF veterans, but also included former employees of homeland security forces. The approval and legislative amendment process was outlined. Mr Tjie stated that the implementation of the NSFPF was contingent upon political approval of administrative machinery, being the GEPF, and that this did at times present a problem. The processing of applications took 60 days, but due to the complexity of NSF information gathering this period often took longer. He stated that the GEPF were in bi-weekly meetings with the DoD, as well as the Director General of National Treasury.

Discussion
The Chairperson asked about the NSF rollout in other government departments and asked why forms were sent to individuals in management roles in these other departments. He stressed that such individuals, as well as ministers and cadres in business, could afford to buy into the NSFPF, but asked what was being done about those who served in NSF and could not afford to do so. He stated that the spirit of the NSFPF was contradicted by the facts on the ground as people who needed this pension could not afford to buy into the scheme. He felt that as legislators the Committee could assist GEPF with implementing a suitable mechanism.

Mr Tjie noted that there was an issue with high-level employees applying for NSFPF and expressed agreement with the Chairperson on his previous points.

Maj Gen Mollo interjected that the GEPF was working well with the DoD on this issue. He noted that there was a glaring disparity between ex-SADF and NSF member pensions. The point of the NSFPF was to level the playing fields. He stated that the fund was designed to help the destitute.

Mr Diale noted that something needed to be done. He explained that as a former MK member he received a Special Pension, which was not taxed, and so he had to pay back tax on the figure. In light of his difficulty in doing so he asked how those less fortunate than himself managed. He asked that the legislation be amended and that the NSFPF be redesigned.

Mr Schippers noted that DoD had asked for political intervention in the issue. He raised the need to take this issue forward to those who were responsible for drawing up the legislation, in order to make it more helpful to comrades who had suffered. He stated that the NSFPF as currently operating was not helpful and that Cabinet and the Minister needed to be approached.

Mr J Phungula (ANC) commented that many veterans were poor or ill, and agreed that this issue must be addressed. .

Ms M Nxumalo (ANC) agreed, and found the issue of SARS back-taxing veterans to be problematic. She stated that another form of the NSFPF would not work, and that the whole system needed to be redesigned.

The Chairperson stated that the Committee should hold a public hearing on service delivery to veterans, which would be more comprehensive. He stated that whilst international norms dictated that two parties must contribute to a pension fund, this case was different and that rigid adherence to monetary principles had undermined the spirit of the fund. He felt that parity needed to be created so that veterans would not be obliged to do more than former statutory force members. He stated that after the public hearing, the Committee would be able to make recommendations.

The meeting was adjourned.