Follow-up Presentation to the S. S. Mkhonto Compensation Commissioner 25 May 2010

Clearing of suspense accounts The suspense account is reconciled every month to identify the items that need to be cleared. R87 million was in the suspense account. This amount (R87 million) has been cleared by March The reasons for this were : 1) due to beneficiary payments made in March 2008 but only reflected in the bank statement of April The proper accounting treatment of this transaction at year end should have been classified as outstanding payments instead of suspense account. 2) Deposits into the Fund’s bank account, with no reference numbers from employers. The bank has since assisted the Fund to trace and allocate these unknown deposits to the relevant employers. 2

Total CF Staff Establishment FILLING OF VACANCIES WITHIN THE FUND 3 Total No Approved posts Total FilledTotal No. Vacancies Vacancy rate as at 31/3/ % Total No Approved posts Total FilledTotal No. Vacancies Vacancy rate as at 31/3/ % 7.8%(24/5/10)

Status on current 64 Vacancies 9 New appointments approved wef 01/04/ Interviews held awaiting NIA results. 28 Posts already advertised, interviews scheduled for May. 3 Vacancies still to be advertised. FILLING OF VACANCIES WITHIN THE FUND 4

Previous Status as at 31 March 2010 Current Status as at 24 May New Appointments approved wef 1/4/10 8 New Appoint approved wef 1/5/10 24 Interviews held awaiting NIA results16 Interviews awaiting SAQA And NIA results 28 Posts already advertised, interviews scheduled for May 2 posts interviews – 20/5/10 5 posts interviews-31/5/10 4 posts interviews- 2/6/10 7 posts interviews- 3/6/10 8 posts interviews-4/6/10 2 posts to be readvertised 3 Vacancies still to be advertised3 Vacancies confirmed to be advertised by HQ on 30/5/10

Month 2009 April May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar TOTAL MonthVacanciesNew Appt. Promot e ResignDismissDeathTrans. Out Trans. In VSRetirementTotal vac. Month end

HRM Vacancy statistics

CLAIM STATISTICS AT 31 MARCH FINANCIAL YEAR CLAIMS REGISTERED CLAIMS ACCEPTED CLAIMS REPUDIATED CLAIMS PAID 2007/ / /

Claims information The table indicates the total number of claims registered during the past financial years, 2007, 2008 and 2009 It also indicates how many claims have been accepted, repudiated to date and how many have awards paid to date- Some claims from previous years have been re-opened and additional benefits paid during this financial year. The difference between registered claims and accepted + repudiated are claims which have not been accepted due to outstanding information Most not accepted claims are where the employee was off duty for 3 days and less, no first medical reports submitted or employee received first aid treatment and did not see a medical doctor. No compensation benefits are payable for such claims

Claims information cont… Claims for 2007 financial year still not accepted by 31 March 2010 were Claims for 2008 financial year still not accepted by 31 March were Claims for 2009 financial year still not accepted by 31 March 2010 were

Compensation benefits processed in the 2009 financial year All compensation benefits paid-TTD, PD plus monthly pensions. Within these claims, are those that had not furnished required documents in the previous years and have only submitted during this financial year after our review process and follow up. The slides indicate that there has been an increase on payments as compared to the previous financial years. This is attributed to the new policy on minimum earnings for TTD and the continuous review of previous claims.

PaymentNo. of paymentsAmount Additional compensation Burial expenses Constant attendance allowance Lump sum to widows Partial dependancy PD lump sum payment (30%) PD pension payment (<30%) PD pension (>30%) Pension TTD Widow & child pension TOTAL Breakdown of compensation benefits processed payments

A claim is registered with an employers report of accident/disease The treating doctor submits the first medical report as evidence of personal injury as required by the act. The fund determines liability for the claim on the basis of the employer’s report and the doctor’s medical report Where liability is accepted, the employer pays salary for the off duty days-maximum of 3 months where after the fund takes over- the fund reimburse the employer for the three months payments While the employee is still off sick, the employer/employee submits progress medical reports indicating prognosis-enables continuous payment of salary by the fund. Once the condition has stabilized, the treating doctor submits a final medical report for the fund to assesses permanent disablement. The act requires the assessment of PD to be done only when the condition is stable. Claims with serious conditions can take up to two years to stabilize hence delayed settlement of such claims. COIDA PROCESS

Unaudited – March 2010 (R000) March 2009 (R000) Contributions revenue Investment income Other income Compensation claims Medical claims Increase in the provision for outstanding claims TOTAL BENEFITS PAID Admin Year end provisions Surplus \ Deficit

The actuarial valuations for the year 2009/10 is in the process of being finalised by the actuaries. The valuation will only be available after the finalisation of the audit ie. August 2010 as actuaries only utilize audited financial statements.

As at the 31 March 2010 the following figures were available for Compensation benefits paid on the financial system Compensation benefits paid Compensation claims**647,122 Medical claims1,441,337 ** Compensation Claims Paid to employees598,944 Paid to employers48,179

Variance between processed and actual paid The difference of(R124 m) between the total actual paid benefits by the Finance Directorate (647m) and the total processed by the Claims Directorate (R771m) is caused by the delays in submission of banking details by beneficiaries. This problem is being addressed through a special campaign-see slide 18

The current unclaimed monies is R28.4 million A notice was published in the Government Gazette volume 529 No of 3 July 2009, to request all beneficiaries of unclaimed monies to claim their dues. During the month of March the Fund ran a month –long radio and newspaper advertisement to request the beneficiaries of the unclaimed monies to come forward and provide the Fund their banking details Since the advert went out beneficiaries came forward and provided the Fund with the banking details and all have since been paid. UNCLAIMED MONIES 18

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DEPARTMENTS CONTRACTUAL OBLIGATIONS TO SIEMENS (High Level) to provide optimised and documented business processes for automation to ensure user and management participation in systems automation to transfer to Siemens, DoL ICT employees prior to contract commencement to ensure timely payment of the unitary fee to inform Siemens 12 months prior to expiry whether the contract will be renewed to compensate for delays or defaults caused by the Department transfer of legacy assets to Siemens to ensure a change management governance process are in place to ensure a secure working environment to manage third party service providers eg. SITA

OPERATIONAL CHALLENGES FROM SYSTEMS Employment Services system o slow response o problems with saving of documents o unstable RESOLUTION : this system has been re-developed and optimised with no major issues reported Compensation Fund systems o disparate and legacy systems o scanning challenges RESOLUTION : Development of an integrated claims management system to commence. Scanning environment has been upgraded. Other General challenges o bandwidth at labour centres (contributes to slow response) 109 centres bandwidth have been upgraded in the last 9 months by SITA

RAND MUTUAL SYSTEM The Fund conducted a Proof of Concept and then planned to pilot the system A budget of R2 million was approved for this process Total costs to Rand Mutual are R These costs relate to user training, systems setup, resources etc.

COMPENSATION FUND CLAIMS SYSTEM DECISION An audit was conducted on the Rand Mutual project which resulted in a negative finding The decision was taken to implement the Siemens solution due to the following : - will be developed based on CF’s business requirements and processes and will be customized for CF - will be a fully integrated system, including the financial module, with additional components eg. Customer Relationship Module - will be aligned to the DoL systems architecture and function across the organisation seamlessly including integration with components of other DoL systems eg. Integrated Client Database - development of the solution and infrastructure is included within the PPP - support and maintenance is from one service provider

High-Level Project Schedule – CF claims system ActivityJuneJulyAugSepOct.NovDecJan 2011 Feb 2011 March 2011 Requirements Workshop Solution Integration Design Blueprint adaptation by all parties Blueprint Sign-Off Realization Final Preparation Training of 100 CF users GO LIVE Roll-Out and Cut-over Data interrogation, cleansing & preparation Data Migration Project close out 15/06/10 30/07/10 30/11/10 31/03/11

Year endedUnitary feeAdditional services Total 31-Mar-03 40,833, Mar ,463,046 36,806, ,269, Mar ,962,744 22,646, ,608, Mar ,210,820 14,130, ,341, Mar ,421,099 21,988, ,409, Mar ,901,365 11,386, ,288, Mar ,499,896 9,694, ,194, Mar ,218,864 12,248, ,467,808 TOTALS PPP PAYMENTS PER ANNUM

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