National Treasury Special Pensions Administration Presentation to Portfolio Committee on Finance and Select Committee on Finance 12 August 2005 Cape Town

Purpose To brief the Committees on : the proposed Amendments to the Special Pensions Act.

Background Special Pensions Act Promulgated on 1 December 1996 Amended in 1998 – Payment of pensions from the age of 35. Amended in 2003 – Condone late applications. Located within the Pensions Administration in the National Treasury Programme 7 – National Treasury Budget Vote

Purpose of the Act To provide pensions for individuals or their eligible dependants, who were prevented from doing so because they had made sacrifices and served the public interest in the course of establishing a non-racial, democratic South Africa.

QUALIFICATION CRITERIA SA citizenship or entitlement to citizenship. At least 35 years of age on 1 December 1996. Was prevented from providing for a pension (for at least five years prior to 2 February 1990) Suffered a permanent and total disability or a terminal disease (No age restriction) Died before 2 February 1990 as a result of any of the circumstances mentioned.

Structure and Process Application via Regional offices and Head Office. Pre-Screening. Verification. Research Adjudication by Special Pensions Board. Appeals to Review Board. Payments Administration.

Update on Current Operations

Statistical Overview as at 31 July 2005 Total applications received 36 328 Approved 15 318 42% Not approved 20 637 58%

Overview of Approved Applications

Statistical Overview as at 31 July 2005 Appeals to Review Board 6374 17% Appeals approved 713 11% Appeals not approved 3152 49% Appeals Pending 2509 40%

Financial Summary Benefits paid to date R1.57 billion Operational expenditure to date. R 58 million Total R1.63 billion

Operational Issues Winding up SP operations Integration of administration and staff into GEPF. Reducing backlog of Review cases. External review of application, adjudication and payments process. Production of publication and or documentary on Special Pensions.

THE PROPOSED SPECIAL PENSIONS AMENDMENT BILL

Proposed Amendments Lapsing of part 1 of chapter 1 providing for pensions and survivor lump sums on 31 March 2006. I.e.the closing date for all new late applications is 31 March 2006, no new late applications will be considered after this date. No amendment to qualification criteria I.e. the age limit of 35 on 1 December 1996 and 5 years full time service remains unchanged. The Principle of one benefit only is retained.

Proposed Amendments Monthly pension for surviving spouses or orphans retrospectively from 1 December 1996 Lump sum benefits on death of pensioner for surviving spouses or dependants continue Funeral benefits for pensioners, surviving spouses and orphans (Additional benefits intended to facilitate better alignment with benefits afforded under other pension schemes)

Proposed Amendments 4. The disestablishment of the Board 60 days and Review Board 90 days after the lapsing of part 1 of chapter 1; head of pensions administration in the National Treasury and the Minister to respectively take over responsibilities.

Proposed Amendments 5. Resolution of administrative and legal difficulties experienced in implementation of the Act Reconsideration and amendment of a determination made under certain circumstances I.e. cases already adjudicated may be reconsidered. Recovery of any pension or benefit paid, to which a person was not entitled

Proposed Amendments Technical and consequential amendments Technical consistency in the Act.

FINANCIAL IMPLICATIONS OF PROPOSED AMENDMENTS

Financial Implications for the Period 2006-2008 1. Estimated cost of monthly pensions to surviving spouses and dependants. R350.4 million 2. Estimated cost of funeral benefits R11 million 3. Estimated cost of operational expenses R37.6 million Estimated total cost of the amendments. R467.4 million

Critical Challenges

Critical Challenges A significant number of new applications may be received once intention of the Amendment is known. The purpose of the Act is still seen as compensation for serving and not addressing inability or prevention from providing for pensions for a significant period

Critical Challenges Possible attempts to defraud the fund. Steps being taken. Expectations were raised on decreasing the qualifying age limit and the length of the qualifying service record.

Communication Implications Need for an extensive media campaign on closure of late applications Need to ensure that eligible beneficiaries are aware and helped to apply. Communication with liberation organizations and other stakeholder groups.

Thank You !!!