Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development South African Post Office SOC Limited Amendment Bill, 2013 Department of Communications Presentation to the PCC 17 September

Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Presentation Outline  Introduction/ Background  Issues raised by the South African Post Office/ Post Office Retirement Fund and the Telpos Pensioner Association  Response on the Guarantee Issue  Response on the Interest Issue  Conclusion 2

Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Introduction/ Background  The Department was invited by the Portfolio Committee on Communications (PCC) to present its proposed Bills, including the South African Post Office SOC Ltd and the South African Postbank Limited Amendment Bills on 06 August 2013  The PCC also invited public submissions on the Bills  Furthermore the PCC invited the Department to respond to the submissions made regarding the two Bills on 17 September 2013  The above submissions were made by the South African Post Office/ Post Office Retirement Fund and the Telpos Pensioner Association 3

Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Issues raised  There are two fundamental issues raised by South African Post Office/ Post Office Retirement Fund and the Telpos Pensioner Association  Guarantee issue Omission of State guarantee from the Bill: The State guarantee refers to the State guaranteeing the obligations of SAPO, that in turn guarantees the financial obligations of the Post Office Retirement Fund 4

Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Issues raised  Interest issue Uncertainty with respect to date of liability for interest: Interest issue refers to the interest to be paid by the Post Office Retirement Fund on any portion of a member’s pension interest assigned to a former spouse in terms of a divorce order or decree for the dissolution of a customary marriage 5

Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Response: Guarantee Issue  One of the objectives of the South African Post Office SOC Limited Amendment Bill is to update and transfer pension related provisions of South African Post Office from the Post and Telecommunication-related Matters Act of 1958 (PTRMA) to the South African Post Office SOC Ltd Act of 2011  In its submission to the Committee, the South African Post Office correctly point out in paragraph 10 of their submission, that the State guarantee is currently provided for in section 10A of the PTRMA  Section 10A of the PTRMA is now the new proposed clause in 21C of the Bill 6

Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Response: Guarantee Issue  Prior to the submission of the Bill to Cabinet the Department wrote to National Treasury on 06 May 2013 seeking a meeting to discuss the State guarantee and how to resolve the matter  Consultative meetings were subsequently held with National Treasury, SAPO and the Post Office Retirement Fund. The consultation on the guarantee could not be concluded at the time the Bill was submitted to Cabinet Committee for approval and therefore the Bill still contained the State guarantee similar to the provision in section 10A  The Department had to proceed with the Bill to the Cabinet Committee in order to meet the deadline set by the Constitutional Court of 07 November 2013 on the “ clean break ” principle 7

Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Response: Guarantee Issue  At its sitting on 19 June 2013 Cabinet Committee recommended that Ministers of Communications and Finance must finalise outstanding consultation relating to the Government being the guarantor of the Post Office Retirement Fund and that the matter be finalised before Cabinet meeting of 26 June 2013  The Department and the National Treasury held an urgent meeting on 24 June 2013 to address issues raised by the Cabinet Committee 8

Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Response: Guarantee Issue  The National Treasury was of the view that there was no longer a Government guarantee since the Post Office Retirement Fund was fully funded as at 31 December 2001  Cabinet on 26 June 2013 subsequently approved the Bill noting that the reference to the State as a guarantor of the Post Office Retirement Fund would be removed from the Bill  In view of the disagreement that exists on the guarantee, and in view of the urgency of this Bill, it is proposed that the pension-related provisions in the Bill be limited to only the “clean-break” provisions  The Department will continue engaging with stakeholders to find an amicable solution 9

Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Response: Interest Issue  The second matter raised by the SAPO and PORF submission is about the date of liability for interest  The Department agrees in principle with their submission, but is of the view that the concern raised is already covered in clause 21I(2)(j) of the Bill. The clause provides as follows,  “ Any portion of a member's pension interest assigned to a former spouse in terms of a decree of divorce or a decree for the dissolution of a customary marriage granted prior to the enactment of this subsection must, for purposes of any law other than the Income Tax Act, 1962 (Act No. 58 of 1962), including, but not limited to, section 7(8)(a) of the Divorce Act, 1979 (Act No. 70 of 1979), be deemed to have accrued to the member on the date of enactment of this subsection, and must be paid or transferred in accordance with paragraphs (a) to (i)”Act No. 58 of 1962section 7(8)(a)Act No. 70 of 1979paragraphs (a)(i) 10

Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Response: Interest Issue  The liability of the PORF in respect of the former spouse therefore only commences on the date of enactment and consequently interest only becomes payable thereafter  In addition, the fact that laws generally do not apply retrospectively support our view on this matter  The proposed clause 21I(2)(j) is also aligned with corresponding provisions in the Pension Funds Act of 1956 and the Government Employees Pension Law of 1996  Lastly the wording in clause 21I is in accordance with final Constitutional Court judgement 11

Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Conclusion  Further discussions should be held with the key stakeholders regarding the State guarantee of the Post Office Retirement Fund  Therefore we should only proceed with the amendments to the 1958 Act to enable the “clean break” principle as ordered by the Constitutional Court  If the PCC agrees the Department will work with the SLA to propose how the Bill should be amended to achieve this objective  On the interest issue the department will also work with the SLA to prepare appropriate wording to clarify when interest commences 12

Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development THE END I THANK YOU 13