1 Presentation to the Portfolio Committee RESTRUCTURING OF PENSION PROVISIONING FOR PUBLIC SERVICE EMPLOYEES 19 August 2003

2 BACKGROUND   Public Service Co-ordinating Bargaining Council resolved to investigate the restructuring of pension provisioning for public service employees, consideration was given to-   pay as you go schemes; and   defined contribution schemes etc   A further collective agreement was signed on 30 November   The collective agreement provides for amendments to the Rules of the Government Employees Pension Fund. Changes to the Government Employees Pension Law, 1996 are also needed.

3 SUMMARY: NEGOTIATED CHANGES   New benefits:   Orphan’s pension   Funeral benefits   Changes to existing benefits:   Annual pension increases to pensioners now guaranteed   New definition of spouse to include life partners   Higher spouses pension option   Cost of purchasing service more affordable   Interest on late payments calculated differently   Dormant membership phased out.

4 SUMMARY: NEGOTIATED CHANGES   Changes to the fund’s operation and management rules:   Floating employer contribution rate introduced   Composition of Board of Trustees changed to expedite appointment of trustees   Removal of bargaining requirement on some rule changes

5 OTHER NEGOTIATED PROVISIONS   Pensionable service increases:   Former General Assistants (casual employees)   Employees eligible under strike settlement agreements   Recognition of NSF service   Investigation into impact of former Venda Pension Fund dissolution   Transfer of former Municipal Police employees into the GEPF (Managed by SAPS)

6 STATUS UPDATE   Implementation is done jointly by DPSA and GEPF   Amended GEPF Rules: Government Gazette dated 8 August 2003   Legislative process underway   PSCBC Task Team reconvened to facilitate implementation

7 STATUS UPDATE   Communication:   Communication material developed and published   DPSA Circular to departments   Membership Booklet   Posters     Road show to all provinces / departments currently underway

8 STATUS UPDATE: BOARD OF TRUSTEES   Eight employer nominees:   Process document for appointment of employer nominees is finalised.   Eight employee nominees   Labour caucus in PSCBC was notified to appoint 6 employee nominees   Defence and Intelligence Services to assist nomination of 1 employee trustee   1 Pensioner representative appointment process assisted by IEC and EISA   Documentation for trustee inception programme under development.

9 STATUS UPDATE: PENSIONABLE SERVICE   General Assistants:   Process continue for validated cases   Employer position on percentage of service recognition under finalisation   New process commenced to ensure that all eligible employees are in the net.   Joint employer and union task teams appointed on national and provincial level, to assist with identification and validation process.   Strike settlement agreements   Process continue to recognise service for eligible employees.

10 STATUS UPDATE: PENSIONABLE SERVICE   NSF Service recognition   Require legislative amendments   Portfolio Committee: Finance requested development of new proposals   Improved dispensation and funding proposals under consideration by Minister of Finance.   Way forward:   Buy-in from Portfolio Committee: Finance   Negotiation mandate   Collective agreement   Accompanying legislative amendments

11 STATUS UPDATE ADMINISTRATION OF NEW BENEFITS   GEPF Employer Procedure Manual and business rules updated   Other GEPF system changes underway   PERSAL system changes initiated

12 STATUS UPDATE OTHER MATTERS   PSCBC referred investigation on Venda Pension Fund impact back to a Task Team   Further discussions between DPSA and GEPF to develop concrete proposals on delays in pension payments   A multi-pronged approach is needed

13 NSF SERVICE   Original dispensation:Recognition on sliding scale   Less than 10 years: 33.3% of service   More than 10 but less than 20 years: 80% of service   Twenty years and above: 100% of service   Employee contribution of 7.5%   Improved dispensation:   Less than 10 years: 50% of service   Ten years and more: 100% of service   No employee contribution-decision to be finalised

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