1. 2020 National Social Security Fund

2. The need for NSSF We need to develop a culture of saving Severe inequality and high unemployment The need to improve the social security framework The State has to find solutions to the social problems

3. MIBFA FUNDS experience (MIPF & EIPF) Biggest Bargaining Council Fund in the country: 10,000 employers 450,000 active members(including pensioners) 1,000,000 former members R86 billion in size – of which R27 billion is surplus Own Internal Benefit Administrator(cost recovery basis) Own Internal Investment Manager(cost recovery basis) Covered by the PFA from 2008 before under LRA since 1954 58 years of experience

4. NSSF challenges examples The challenges: Paying death benefits and finding dependants(+200 deaths a month) Normal claims payments 5500 a month Surplus payments 5000 a month To pay 20 000 surplus claims it will take 4 months Sending out communication and statements to every member (10 000 employers and 450 000 members) Trustees are elected by the sponsors(Trade Unions & Employers)

5. NSSF challenge to manage cost Cost of Mibfa Funds: Operating on a cost recovery basis To generate a claim/tracing cost R40 (outsourced cost =R400 + R270) Investment Cost ( the cost to manage total asset 20bp ) (80bp ) Admin cost current members 0.4% of salary Admin of pensioners and beneficiaries at no cost (80bp) Death benefit self-insured & paid–up’s at no cost (80bp) Section 14’s no cost (outsource = R1700 per hour) (we are in process of recover cost except from beneficiaries)

6. NSSF challenges Systems: Create and maintain database i.e. deaths, new members etc. Ensuring employer deducts contributions accurately and timeously Managing possible fraud e.g. member company deducting without paying over, then liquidating and opening in another name Company liquidations to recover contributions, resulting in job losses Management information systems on all levels Good payments system with all checks and balances

7. Governance Special committees to be established: Investment Committee Risk & Compliance Committee Death Committee Communication Committee Governance Committee Surplus Committee Committees will report 4-5 times a year to Board of Trustees Oversight by the Board of Trustees (fiduciary responsibilities)

8. Governance Conflict of interest All processes to be transparent Trustees to be elected by sponsor’s structures or elected by members? All service providers has to declare benefits given to Trustees on a quarterly basis

9. Conclusion The NSSF must have it’s own Administration and Asset Manager (Core mandate) They must be section 21 companies(not for profit) Umbrella, Bargaining Council and NSSF can run side by side and the first two must meet a certain criteria or default into the NSSF All service providers to declare gifts given to Trustees Economies of scale negotiate best deals (housing backed loans)