Van Rheede van Oudtshoorn Petition to Parliament Presented by Kith Moloi to the Committee on Private Member’s Legislative Proposal 3 August 2011

Facts Ms van Rheede was employed in a permanent capacity at the Department of Justice on 1 October 2000. She was also admitted to the GEPF on the same date. She retired on 30 June 2010, at age 65.

Facts On date of retirement she had 9 years and 9 months pensionable service.

Law Rule 14.3 of the rules to the Government Employees Pension Law, Proclamation 21 of 1996 determines the benefits payable on retirement.

Law If a member retires with less than ten years service retires, the member is entitled to a gratuity equal to the member’s actuarial interest – rule 14.3.2

Law If a member retires with more than ten years service the member is entitled to a gratuity and an annuity as set out in rule 14.2.2 – see rule 14.3.3.

Law It is noted that the gratuity paid to those members with more than ten years service is substantially less than the gratuity paid to those with less than ten years service as a member with more than ten years service is also entitled to an annuity i.e. a monthly pension up to date of death.

Law Any member may purchase additional service in terms of rule 10.4. However, service may only be purchased while the person is still a member of the GEPF.

Law Post retirement medical subsidies are regulated by agreements concluded between the State as employer and organised labour in the Public Service Co-ordinating Bargaining Council (PSCBC).

Law In terms of the relevant PSCBC resolution, in order to qualify for a post retirement medical subsidy, the State employee must have 15 years actual service on retirement. In the event of a medical retirement, the employee must have 10 years actual service.

Application of law to facts In order to have qualified for a gratuity and an annuity, Ms van Rheede would have to have had ten years pensionable service. On the facts she only has 9 years and 9 pensionable months.

Application of law to facts Ms van Rheede could have purchased three months pensionable service in terms of rule 10.4 while she was still a member. However the rules do not allow her to purchase service after exiting the GEPF.

Application of law to facts Ms van Rheede received a gratuity of R194997.02 (R181158.96 after tax and other deductions) on her exit from the GEPF based on her 9 years and 9 months of pensionable service.

Application of law to facts If Ms van Rheede had purchased three months service prior to her exit from the GEPF, she would have received a gratuity of R52958.14 and a monthly annuity of R1224.04.

Application of law to facts If she had retired with more than ten years service she would have received, up to 31 July 2011, a total amount of R63974.50 (gratuity of R52958.14 and arrear annuities amounting to R11016.36).

Application of law to facts This means that had the GEPF been authorised to approve the purchase of service after Ms van Rheede exited the GEPF, which it cannot, that Ms van Rheede would owe the GEPF R131022.52 (Did receive R194997 – less gratuity of R63974.50 and arrear annuities of R11016.36 – balance is R131022.52). There would have been a cost for the purchase of service as well.

Application of law to facts It is noted that members retire each day with less than ten years pensionable service and receive only the gratuity payment.

Application of law to facts As Ms van Rheede does not have 15 years actual service she does not qualify for a post retirement medical subsidy.

Thank You For email queries Kith.moloi@gepf.co.za Questions and Answers Thank You For email queries Kith.moloi@gepf.co.za