Implementation of the Special Pensions Act. (As Amended) UPDATE TO PORTFOLIO COMMITTEE ON FINANCE 8 August 2007

2 Purpose To provide the Committee with an overview on the implementation of the Special Pensions Act (Act 69 of 1996)

3 Background The Act was promulgated in 1996 to give effect to section 189 of the interim constitution, “to make provision for a Special Pension to persons who made sacrifices or served the public interest in the establishment of a democratic constitutional order”

4 Qualification Criteria (As set out in the Act) Had to be 35 years or older on 1 December South African citizenship or entitlement to SA citizenship Full time service in a political organisation which was restricted or declared unlawful. Banishment or restriction. Imprisonment or detention for an offence with a political objective. Inability to build a pension for at least 5 years.

AMENDMENTS Overtime amendments were proposed.

6 Summary of Amendments 1998: Benefits extended to persons suffering of terminal diseases. Payment advanced to date on which person becomes 35. Benefits paid to members of the legislature.

7 Summary of Amendments 2003 (Act 21) Condonation of late applications Dissolution of the Board Remove requirement that 1 Review Board Member had to be an actuary. 2003(Act 30) Non Statutory Forces (NSF) option introduced. Ceasing of Special Pension if pensioner opts for “NSF” option.

8 Summary of Amendments 2005 (Act 28) Lapsing of the rights to Special Pensions and survivor’s benefits on 31 December Provision of monthly pensions for surviving spouses and orphans of pensioners (retrospective), as well as a funeral benefit (not retrospective).

9 Summary of Amendments Reconsideration of cases already adjudicated on the basis of material new facts. Re-enforcing provision for recovery of benefits paid to a person that was not entitled to that benefit. Dissolution of the Board and Review Board.

Implementation of Act (as amended)

11 Lapsing Of Rights To Benefits On 31 Dec Embarked on extensive Communication and Awareness campaign.  Road shows in all provinces  Regional visits  2 million newsletters distributed (inserts in major newspapers)  Briefed political organisations.

12 Awareness Campaign Radio Adverts  SAFM  Lesedi  Ligwalagwala  Ukhozi  Mhlobo Wenene Newspaper adverts  City Press  Sowetan  Sunday World

13 Newsletter Inserts City Press Indabazethu Umtata Herald Ilizwi Daily Dispatch EP Herald Sowetan Daily sun Tshwane Sun Isoloezwe Ilanga The Rising Sun Lentswe Capricorn Voice Northern Review Mpumalanga News The Echo VUKANI Plainsman Free State Issue

14 Statistical Overview Rec’dApprovedNot Approved Out standing Applications received by 31 December (34%) (47%) (19%) Applications received by end of Review applications (12%) (49%) (39%) Section 7 (2) (New material facts) (32%) 33 (21%) 76 (47%)

15 Statistical Overview Rec’dApprovedNot Approved Out standing Spouses pensions Orphans9243 Funeral benefits

16 Financial Overview Benefits PaidOperational Expenses R2.01 billionR86,4 million (4.3 %)

17 Dissolution of Board Board Dissolved on 28 February 2007 as per Act. Powers of Board devolved to Director General. Additional capacity will be added to fast track adjudication process.

18 Common Reasons for Non Approval (Risk factors) Does not meet the minimum age requirement Does not meet the minimum service requirement (5 years) Does not have full-time service in a previously banned political organisation Committed a criminal offence after 2 February 1990

19 Common Reasons for Non Approval Was actively engaged in actions to undermine efforts to establish a non-racial democratic constitutional order. Does not meet the definition of a surviving dependant. Does not meet the definition of disability. Political Party could not verify the service claimed. Insufficient information to support the claim. Suspicions of fraud.

20 Members of the Board 1996 – 1998 Ms. N Moletsane Ms. S Masote Mr. T Shange Ms. B Maree Rev. D White

21 Members of the Board 1998 – 2000 Mr. I Makopo Mr. E Mohammed Ms. V Petersen Mr. J Njeke Ms. U Bhoola

22 Members of the Board 2001 – 2002 Mr. I Makopo Mr. ZI Mthimunye Mr. SE Thokoane Mr. CAS Setsubi Ms. RW Ncame

23 Members of the Board Mr. I Makopo Mr. ZI Mthimunye Mr. SE Thokoane Ms. RW Ncame Mr. Moloi

24 Members of the Board Mr. I Makopo Mr. ZI Mthimunye Mr. SE Thokoane Ms. RW Ncame

25 Members of the Review Board (3) Adv. Z Barmania Mr. M Matsobane Prof. A Asher (Actuary) Mr. ML Moloi Adv. Mokoditoa Mr. W Dam (Actuary) Mr. P Burra (Actuary) Mr. M Walker (Actuary)

26 Adjudication Process Files pre-screened and prepared by File Preparation Unit. Files examined by adjudication unit within SP Admin. Recommendation submitted to delegated authority for approval. Takes approximately 90 to 120 days to finalise an application. Common cause for delays – missing documentation and verification process.

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32 Dissolution of Review Board Review Board dissolved with effect 29 May 2007 as per the Act. Functions of the Review Board devolves to the Minister of Finance. The Minister will obtain advice from persons with appropriate political and legal experience. The Minister will institute special measures to ensure that all backlogs are addressed.

33 Matters Under Consideration. 1. To amend the schedule of benefits to increase pension when pensioner reaches the age of To consider the payment of a monthly pension to the surviving spouses of persons who died before the Act was promulgated.

34 Age Qualification Criteria (Under 35’s) Extract from PCOF report adopted by the National Assembly on 8 November “The Committee recognizes that there are potential beneficiaries who have met all, except the age criteria. … the Committee has resolved that the Executive should urgently develop other measures to address the plight of those excluded purely on the basis of age …”

35 Age Qualification Criteria (Under 35’s) PCOF report of 16 November “That the House request the Leader of Government Business to provide feedback on the adoption of the Resolution with particular reference to co-ordinating the implementation of programmes which will provide education, skills and other measures”

36 Age Qualification Criteria (Under 35’s) Treasury remains committed to participate in any initiatives towards implementing these resolutions.

37 Irregularities in Implementation of the Act. A desk top study commissioned by Treasury suggested irregularities and evidence of fraudulent activity e.g.  Persons who had committed schedule 1 offences were not removed from the system.  False biographies were submitted.  False claims by dependants and spouses.

38 Irregularities in Implementation of the Act. Treasury engaged the services of the Special Investigating Unit. The investigation commenced in January 2007 and is scheduled to be completed by July 2008.

39 Key Challenges To streamline the Adjudication and Review process so that we can finalise all outstanding applications within 18 months. Verifying information provided by applicants.