Question NW3088 to the Minister of Transport
09 November 2023 - NW3088
Lees, Mr RA to ask the Minister of Transport
1)With regard to the cancellation of the post-retirement medical aid benefits for employees of the Road Accident Fund who were employed prior to 1 May 1998, what (a) are the details of (i) the post-retirement medical aid benefits that were cancelled and (ii) the reasons for the benefits being cancelled and (b) alternative and/or equivalent benefits were provided to the affected employees. (2) what (a) process was followed that led up to the cancellation of the medical benefits and (b) is the total number of employees who have retired and are not receiving the post-retirement medical aid benefits. (3) what is the (a) number and details of employees affected by the cancellation of medical benefits and (b) actuarially calculated cost of the medical aid benefit remaining in force until all specified employees employed before the 1 May 1998 have died; (4) whether she will furnish Mr R A Lees with a copy of the letter sent to employees regarding the cancellation of the medical aid benefits; if not, why not; if so, on what date; (5) what is the status of case number GATW15422-21 that is or was before the Commission for Conciliation, Mediation and Arbitration?
Reply:
a (i), Details of The RAF Post-Retirement Medical Aid Benefit (PRMA);
PRMA is a historical condition of service benefit provided to employees who were permanently employed with RAF (Fund) prior to 01 May 1998.
In terms of this benefit, the RAF would subsidize 50% (fifty percent) towards the medical aid contributions on/and throughout the retirement of such employees until the death of the retired employee or voluntary termination by the employee.
(a)(ii)
The post-retirement medical aid benefit was discontinued due to not only the dire financial status of the Fund but also the long-term unsustainable financial liability that such a benefit would have on the RAF.
The total estimated liability on this scheme has grown from R2 300 000 (two million three hundred thousand rands) (in April 1998 to an estimated R55 609 000 (fifty-five million six hundred and nine thousand rands) as of 31 March 2021 as per the actuarial valuation report.
The 31 March 2021 actuarial valuation report further projected a substantial increase in this liability to sixty-two million four hundred and sixty thousand rands (R62 460 000) as of 31 March 2022 This figure would continue to escalate exponentially considering changes in mortality rates and high inflation.
The RAF management with due and careful consideration of the above factors and the current financial sustainability of the RAF resolved that it was not viable to continue with the benefit.
The benefit was therefore discontinued with effect from 01 October 2021 for all eligible and active employees.
Moreover, this termination further ensures that the provision of benefits is consistently applied, uniformly across the board, benefitting all employees. Whereas only a few employees benefited from this benefit in the past it is now applied equitably and affordably amongst all employees. The Fund therefore sought to apply benefits to all its employees, not just a few.
(b)There is no alternative or equivalent benefit provided to the affected employees due to cost containment measures.
All employees are remunerated on total employee costs (TEC) and this ensures a uniform and equitable pay structure for all RAF employees.
All employees are equally responsible for ensuring medical cover post-retirement.
(2)(a) Upon confirmation of the Fund’s legal recourse in terms of its obligation and rights, an extensive and transparent consultation process was undertaken with affected parties. This included written correspondence with affected parties and consultation with current and those employees eligible for the benefit.
Following that, consultations with individual employees, and notice of termination letter(s) were issued to all affected employees on October 2021.
(2)(b)Of the 107 (one hundred and seven) employees, 8 (eight) employees have since retired post the October 2021 and are not receiving the benefit.
(3)(a) There were 107 (one hundred and seven) active employees who would have qualified and were affected by the cancellation of this medical benefit for the financial year ended 31 March 2022.
Of the 107(one hundred and seven) employees, 8 (eight)have since retired and did not receive the benefit as this was terminated before their retirement date. 3(three) took voluntary severance package, 3(three) deceased, 3 (three)resigned and 1(one) dismissed.
There are currently 88 (eighty-eight) employees in service affected by the cancellation.
There are currently 22 (twenty-two) employees who have the benefit as they retired before the benefit was terminated on 01 October 2021.
(3)(b)The total estimated liability on this scheme has grown from R2 300 000 (two million three hundred thousand rands) in April 1998 to an estimated R55 609 000 (fifty-five million six hundred and nine thousand rands) as of 31 March 2021 confirmed by the actuarial valuation report.
This actuarial valuation report further projected a substantial increase in liability to increase to R62 460 000 sixty-two million four hundred and sixty thousand rands at 31 March 2022.
(4) Letters were issued to all affected employees
(5)The CCMA has postponed the matter indefinitely at the request of the employees. The
matter will be set down only when the employees revert to the CCMA.