Public Audit Bill; Public Investment Corporation Bill; National Payment System Amendment Bill; Government Employees Pension Law

Meeting report

FINANCE SELECT COMMITTEE
4 October 2004
PUBLIC AUDIT BILL; PUBLIC INVESTMENT CORPORATION BILL; NATIONAL PAYMENT SYSTEM AMENDMENT BILL; GOVERNMENT EMPLOYEES PENSION LAW AMENDMENT BILL: BRIEFING AND ADOPTION

Chairperson: Mr T Ralane (ANC)

Documents handed out
Public Audit Bill [B1-2004]
Public Investment Corporation Bill [B6B-2004]
National Payment System Amendment Bill [B14B-2004] (awaited)
Government Employees Pension Laws A/B [B15-2004]

SUMMARY
The Committee was briefed on the following bills: Public Audit Bill; Public Investment Corporation; National Payment System Amendment Bill, and the Government Employees Pension Law Amendment Bill. The Committee adopted all the Bills. It expressed concern and displeasure over the fact that no comments had been received from provinces and the South African Local Government Association (SALGA) on the Public Audit Bill. The Chairperson read a letter from SALGA in support of the Bill.

MINUTES
Ms D Hlajoane (Assistant General Legal Counsel: South African Reserve Bank) presented on the National Payment System Amendment Bill. Ms M Vercuil (Legal Advisor: GEPF) presented the Government Employees Pension Law Amendment Bill. Mr B Molefi (CEO: PIC) presented the Public Investment Corporation Bill.

Government Employees Pension Law Amendment Bill
Ms Vercuil said that the purpose of the Bill is to align the law with Resolutions taken at the Public Service Coordinating Bargaining Council (PSCBC) in 2002 and 2003. It also provides for amendments to the benefits structure of the Government Employees Pension Funds.

Amendment of sections 1 and 21 of Proclamation 21 of 1996
The Bill provides for the correction of errors: Sections 1 and 23 of Proclamation 21 of 1996.

The definition of 'dependant' in section 1 of the Law is amended by deletion of the word 'moment' after the word 'time'. Section 23 of the Law is amended by insertion of the word 'to' after the word 'payable'.

Amendment of Section 30A of Proclamation 21 of 1996, as inserted by section 2 of Act No. 35 of 2003

The service of members in the former non-statutory forces and services can, on application, be recognised as pensionable service for purposes of pension benefits paid by the Government Employees Pension Fund (GEPF). Section 30A provides that where a former NSF member, whose NSF service has been recognised as pensionable service, has received a benefit in terms of the Special Pensions Act, 69 of 1996, the benefit payable by the Fund shall be reduced in accordance with the rules.

A similar provision, with reference to demobilisation benefits (in terms of Act 99 of 1996), was by mistake omitted from section 30A at the time of enactment of Act 35 of 2003. The intention was to refer to both special pensions as well as demobilisation benefits.

The amendment of the definition of 'matters of mutual interest' in section 1 of the Law

The definition of 'matters of mutual interest' currently refers to 'all matters dealt with in the Law and rules' The amendment makes clear that collective bargaining does not apply to non-benefit related amendments.

Clause 2: Amendment of Section 21 of the Law
The amendment enables the Fund to provide for guarantees to members in respect of home loans by registered financial institutions or otherwise approved institutions. The fund would be allowed to deduct from the benefits payable by the Fund any amount, plus interest, due to the Fund in respect of an amount for which the Fund becomes liable under a guarantee furnished in respect of a member.

Clause 3: Amendment of Section 22 of the Law
The word 'prescribed' in relation to prescribed forms was deleted. The amended section would refer to 'applicable' forms of the Fund instead of 'prescribed' forms. 'Prescribed' means prescribe by rule in terms of section 1 of the Law. The Board has never 'prescribed' any forms to be used by the Fund or the contents thereof. The forms used by the Fund and the contents thereof are determined from time to time in accordance with the business and administrative needs of the Fund and electronic systems used by the Fund.

Clause 5: Amendment of section 25 of the Law
The phrase 'in terms of its pension increase policy' is inserted at the end of section 25(1). This amendment specifically provides for the Board to deal with annual pension increases in terms of a policy determined by the Board.

Clause 6: Amendment of section 26 of the Law
The Fund shall pay interest on any part of the amount of the benefit not paid within 60 days of the benefit becoming payable, calculated from the date following the day that the benefit becomes payable (last day in service or date of death, etc.). In terms of the current section 26(2), interest is payable on any part of the benefit not paid within 60 days of receipt of duly completed statements. The purposes of the amendment to section 26(2) is for interest to accrue to the member, pensioner or beneficiary after sixty days of the member, pensioner or beneficiary becoming entitled to the benefit irrespective of when the GEPF receives the relevant duly completed documentation.

The amendment to section 26(2) by implication necessitated an amendment to section 26(1) of the Law. Section 26(1) would no longer refer to the receipt of duly completed statements but to the date on which the benefit becomes payable to the member, pensioner or beneficiary.

Section 26(4) is inserted to provide that interest shall not be paid on funeral benefits payable by the Fund. The fund aims to pay funeral benefits within days after the submission of a valid claim. The payment of interest would not result in a material advantage to the person so paid but may result in an additional administrative burden on the Fund that may indeed delay the payment of such benefits.

Clause 7: Amendment of section 27 of the Law
The amendment provides for the abolishment of the provision allowing members to be granted the option to hold dormant membership status to the Fund. The amendment is to be effective retrospectively as from 1 April 2003.

Discussion
Mr B Mkhaliphi (ANC) noted that the Memorandum on the Objects of the Bill provided that the content of the changes brought about by the Bill to members of the Fund would be communicated to members after it had been passed into law. He wondered if such a situation was desirable. He asked if members of the Fund were consulted when the Bill was drafted.

Ms Vercuil replied that all amendments were negotiated at the PSCBC. Employees were represented by their unions.

Mr E Sogoni (ANC) asked what would be the difference in terms of status between dormant members under the prevailing situation and dormant members after the Bill had been passed into law.

Ms Vercuil replied that currently when members leave the Fund before their pension retirement date they have an option of becoming dormant members. Their benefits are kept in the funds and paid when they reach retirement age. However, the growth in these benefits is very low. Dormant members pose different administrative problems and hence a decision was taken to do away with them.

The Chairperson read the motion of desirability of the Bill and the Committee's report on the Bill, and the Committee agreed with both of them.

National Payment System Amendment Bill
Ms Hlajoane said that the Bill deals with the withdrawal of the recognition of a payment system management body; provision for designated settlement systems; enabling payments to third persons and provision for issuance of directives by the Reserve Bank.

The presenter proposed an amendment to clause 13(8) by inserting the words "1 or " after the word "subsection". The reason for the proposal is that initially there was only one offence and now they are two.

Ms Hlajoane also proposed the deletion "and commencement" in the title of clause 17. She also proposed the deletion of the words "and comes into operation on a date determined by the President by Proclamation in the Gazette". The Bill should not wait for the proclamation process given its urgency.

The Chairperson read the motion of desirability of the Bill and the Committee's report on the Bill and the Committee agreed with both of them. The Committee adopted the Bill with amendments.

Public Investment Corporation Bill
Mr Molefi said that the object of the Bill is to establish a statutory corporation to be known as the Public Investment Corporation. The Corporation's objective would be to become a financial services provider as contemplated in the Financial Advisory and Intermediary Services Act of 2002 (FAIS Act). The Corporation would be wholly owned by the State represented by the Minister of Finance. The Minister would appoint the Board of the Corporation in consultation with Cabinet. The Board would determine the Corporation's policy subject to the overall authority of the Minister.

The Bill simply provides for an establishment of a juristic person. The Board would supersede the Commissioners. The assets, liabilities, rights and obligations of the Commissioners would be transferred to the Corporation. The Bill would allow the Corporation to function as a modern investment manager.

The Chairperson read the motion of desirability of the Bill and the Committee's report on the Bill and the Committee agreed with both of them.

Public Audit Bill
The Committee expressed concern over the fact that no comments were received from provinces and South African Local Government Association on the Public Audit Bill.

Mr Sogoni said that the problem might be that provinces and SALGA probably share the view that they do not have to make comments on section 75 Bills.

Mr M Bhamjee (ANC) suggested that the Committee should proceed with the Bill since the approval of the Bill by the Committee was not contingent upon SALGA's concurrence.

Most members were displeased and concerned that there were no comments on a very critical piece of legislation. Nevertheless, it was agreed that the Bill should be passed to ensure the smooth execution of the Auditor General's functions.

The Chairperson read the motion of desirability of the Bill and the Committee's report on the Bill and the Committee agreed with both of them.

The meeting was adjourned.