UNEMPLOYMENT INSURANCE FUND BRIEFING FOR PORTFOLIO COMMITTEE CAPE-TOWN 1 ST JUNE 2004

UNEMPLOYMENT INSURANCE FUND This new act is a product of an extensive research and an inclusive consultative process dating as far back as Stakeholders who participated were drawn from the academia, labour, business, ILO, the public and other government departments.

PROCESSES INFORMING THE ACT s Minister of Labour’s Five Year Plan 1995 s Labour Market Commission Report s Stakeholders Forum of 1996 s Report of the Ministerial Task -Team s DoL’s Position Paper s Second Stakeholders Forum 1998 s Public Representations s Minister of Labour’s 15 Point Plan 1999

PROCESSESS INFORMING THE ACT CONT’ Detailed input from ILO. Detailed input from National Treasury.

OBJECT OF RESTRUCTURING THE FUND ¥ To develop a new policy on Unemployment Insurance Coverage and the design of an institutional framework, to deal with both the administrative and legislative short- comings of the fund.

KEY ASPECTS OF THE NEW LEGISLATION ¥ Coverage ¥ Compliance and Enforcement Measures ¥ Discrimination ¥ Entitlement to Benefits ¥ Benefit regime ¥ Actuarial inputs

KEY ASPECTS OF THE NEW LEGISLATION ¥ Employer-employee Database

COVERAGE ¥ Learnerships ¥ Public Servants ¥ Company Directors & Members of a CC ¥ Migrant Workers

COMPLIANCE AND ENFORCEMENT Compliance Orders SARS Interest and penalties Suspension of a contributor.

ENTITLEMENT TO BENEFITS Ordinary Unemployment benefits Illness benefits Maternity benefits Adoption benefits Dependent’s benefits

AFFORDABLE BENEFIT REGIME Sliding scale Top up

ACTUARIAL EVALUATION Actuarial inputs Actuarial database Annual actuarial evaluations

EMPLOYER-EMPLOYEE DATABASE Duty of the COMMISSIONER. Maintain databse of Information to be supplied by employers Feedback to employers

CONTRIBUTOR DATA EXTRACT

CONTRIBUTOR SALARY DISTRIBUTION

INCOME AND EXPENDITURE YEARBENE FITS MIL. BENE FIC. (000) INCO ME ADMI N EXP (000) EMPL OYER S

FINANCIAL POSITION OF FUND

PERIOD TAKEN TO APPROVE CLAIM PER REGION

PERIOD TAKEN TO APPROVE CLAIM PER SECTION

CHANGES IN CLAIM PATTERNS Number of claims increased significantly from August 2003 onwards. Claim patterns appear to be changing Period taken to apply - average increased from 45 to 75 days Period to approve claim – average increased from 30 to 37 days Expect more IBNR claims to emerge in the future due to the additional delay Major reason for the increase in outstanding claims reserves

Claimants by termination reason and sex