Prepared by the Chief of Human Resources, DOD 13 November 2007 Briefing to the Portfolio Committee on Defence on the Mobility/Exit Mechanism for Members of the SA National Defence Force and the Employee Initiated Severance Package for Public Service Act Personnel Prepared by the Chief of Human Resources, DOD 13 November 2007

Aim To brief the Portfolio Committee on Defence on the implementation of the Mobility/Exit Mechanism (MEM) for members of the SA National Defence Force and the Employee Initiated Severance Package (EISP) for Public Service Act Personnel (PSAP)

Scope Exit Mechanisms Conclusion Implementation of the MEM for SANDF members and EISP for PSAP Analysis of the Impact of Implementation of the MEM and EISP Conclusion

Exit Mechanisms: MEM Legal basis Intent of MEM GEPF Rule 14.8 and 20 amended Approved by National Treasury Minister of Defence approved 5 Jul 05 (ito Section 55 of Defence Act [42 of 2002]) (Introduced wef 12 July 2005) Intent of MEM Should lead to a tangible rightsizing progress Execute through realistic succession planning Guard against the exodus of expertise/scarce skills Advise members iro career progress as informed by the Transformation and Restructuring imperatives Choice to accept/reject offer – MEM is voluntary

Exit Mechanisms: MEM (cont) Guidelines for Succession Planning iro MEM Are functional groups/musterings constrained by critical shortages Status of ETD and learner throughput Maintenance of expertise Contribution to rightsizing (MTEF & longer) Contribution to race-rank distribution correction “Old” Service System contract expiries and renewal justified Succession planning: Role of Services and Divisions

Exit Mechanisms: EISP Minister of PSA determination introduced the EISP wef 1 Jan 06 Ito Section 3(3)(c), Public Service Act, 1994 DOD introduced the EISP wef 31 May 06 EISP Benefits Structure Pension beenfits ito the Gov Employees Pension Law, 1996 Departmental benefits ito the Implementation Measures EISP Application Employees initiate their separation via the EISP

MEM for SANDF Members: Benefit Structure Less than 10 years service and/or younger than 55 years of age 10 years pensionable service and 55 years or older GRATUITY & ANNUITY - NO SCALING DOWN OF PENSION BENEFIT RULE 14.3.3(b) - WITHOUT AN ADDITION OF PENSIONABLE SERVICE RULE 14.2.4(b) ACTUARIAL INTEREST RULE 14.4.2 STATE GUARANTEE: Third party debts recovered from exit pay CONTRACTUAL OBLIGATIONS: Released PRO-RATA SERVICE BONUS LEAVE: Payment of leave credit RESETTLEMENT: Actual expenses MEDICAL PROVISION: Plus 10 years service, option to buy into RFMCF up to age 60, and eligible for medical service according to SAHMS provisions EXIT PAY: 2 weeks for every full year service, but a minimum of R 15 000.00 payable OFFICIAL HOUSING: One month’s notice SUBSIDISED MOTOR VEHICLE SCHEMES RESKILLING: Maximum of R13 000.00 for reskilling, training for employment opportunities, and entrepreneurial skills MEM Pension Benefits ito GEPF Departmental Benefits

EISP for PSAP Employees: Benefit Structure Less than 10 years service and/or younger than 55 years of age 10 years pensionable service and 55 years or older GRATUITY & ANNUITY - NO SCALING DOWN OF PENSION BENEFIT RULE 14.3.3(b) - WITHOUT AN ADDITION OF PENSIONABLE SERVICE RULE 14.2.4(b) ACTUARIAL INTEREST RULE 14.4.2 EISP Pension Benefits ito GEPF Departmental Benefits MEDICAL: 55 yrs & older qualify for post-retirement medical assistance: Less 10 yrs equal 12 times employer contribution 10 to 15 yrs equal to 36 times employer contribution 15 yrs plus 2/3rd employer contribution per month STATE GUARANTEE: Third party debts recovered from exit pay CONTRACTUAL OBLIGATIONS: Released LEAVE: Payment of leave credit RESETTLEMENT: Actual expenses, 55 yrs & older compensated according to PSCBC Resolution 3 of 99 & Departmental Policies EXIT PAY: 2 weeks for every full year service, but a minimum of R 15 000.00 payable OFFICIAL HOUSING: One month notice SUBSIDISED MOTOR VEHICLE SCHEMES RESKILLING: Maximum of R13 000.00 for reskilling, training for employment opportunities, and entrepreneurial skills PRO-RATA SERVICE BONUS

MEM as at 07 November 2007: Approved by Minister of Defence Race and Gender

EISP as at 07 November 2007: Approved by Minister of Defence Race and Gender

MEM as at 07 November 2007: Approved by Minister of Defence Age Group

EISP as at 07 November 2007: Approved by Minister of Defence Age Group

MEM AND EISP as at 07 November 2007: Approved by Minister of Defence Fin year and Budget Holder

Exit per reason other than Exit Mechanism Termination Type 2005/06FY 2006/07FY Contract Expired 500 1 023 Deceased 864 780 Departmental Transfer 281 830 Discharged 319 194 Medical Discharged 104 142 Resigned 1 319 1 104 Retired 350 312 Total 3 737 4 385 Note: FY 2005/06: MEM/EISP = 12,8% of total exits FY 2006/07: MEM/EISP = 18,7% of total exits

Conclusion Steady results are being achieved on stated objectives eg representivity and age profiles with the implementation of the MEM 37,6% of all exits are in the rank group Col, Lt Col, WO1 and WO2 26,9% of all exits are white males in the rank group Col, Lt Col, WO1 and WO2 71,2% of all exits are White Difficult to forecast the exact rightsizing results as MEM/EISP are voluntary The tempo of implementation for both the MEM and EISP determines their success in the DOD Continuous (monthly) monitoring of progress Continued emphasis on succession planning efforts ito the MEM application

DISCUSSION/QUESTIONS