1. UIF ANNUAL REPORT PRESENTATION FOR 2004/05
Portfolio Committee
01 November 2005

2. INTRODUCTION
Thank you for inviting us to present to you the Annual Report and Annual Financial Statements for the 2004/05 financial year of the Unemployment Insurance Fund

3. MANDATE
The Unemployment Insurance Fund was established in terms of Section 4(1) of the Unemployment Insurance Act, 2001.
The Fund administers the unemployment insurance contributions collected from employers and employees to pay benefits and related administrative expenses.

4. KEY OBJECTIVES OF THE FUND
Broaden coverage of Beneficiaries
Improve Service delivery
Strengthen Compliance and Enforcement
Sustain an affordable benefit regime
Resolve legislative and administrative challenges.

5. Achievements – 2004/05 FINANCIAL VIABILITY IMPROVED
Financial Reserves up 50%
Accumulated Reserves of R10,197 billion up 50% - fully reserved as at end of March 2005.
Revenue greater than total expenditure
Net surplus of R2,071 billion compared to R121 million for 2003/04.
The Fund received R6,152 billion in revenue and paid out R2,475 billion in benefit payments up 9% and 18% respectively on 2003/04.
Investments with PIC increased by 81%
Investments with PIC valued at R9, 759 billion compared to prior year value of R5, 389 billion.

6. Over half a million beneficiary claims paid – up 13%
Benefit type 
Claims
‘000 
% up year
Amount (R)000
% up on year
Unemployment
440
12%
1,832,349
19%
Illness 26
30%
135,775
24%
Maternity/Adoption 72
14%
289,534 9%
Dependents 25
217,846
20%
Total
  563
2,475, 504

7. Number of beneficiaries by benefit type over the years
Unemployment
Illness
Maternity/ Adoption
Dependants
Grand Total
2001
544000
17000
55000 21
637000
2002/03
463000
18000
63000
25000
569000
2003/04
393000
20000
23000
499000
2004/05
440000
26000
72000
563000
+12%
+30%
+14%
+9%
+13%

8. Snapshot of Monetary value of benefits paid over the years
Unemployment
Illness
Maternity/Adoption
Dependants
2002/03
2,030205
97,388
284,832
168,738
2003/04
1,536013
109,442
266,012
182,104
2004/05
1,832349
135,775
289,534
217,846
+19%
+24%
+9%
+20%

9. Improving Client Satisfaction - Number of Approved claims for 04/2004 to 07/2005 up 2.5%

10. Improving Client Satisfaction - Number of Rejected claims for 04/2004 to 07/2005 down 2.5%

11. Improving Compliance: Number of Commercial employers and employees registered

12. Improving compliance: Number of Dosmetic employers and employees registered

13. Improving Compliance – 2004/05
Commercial Registrations
Employers ,608
Employees 6,475,541
Domestic Registration
Employers 631,593
Employees 500,683

14. Improving diversity in the workplace: Employment Equity Targets
target set for March 2005
31 March 2005
%variance
African
male
39.60%
21.94%
17.66%
female
33.90%
32.29%
1.61%
Asian
1.20%
0.63%
0.57% 1%
0.94%
0.06%
Coloured 2%
1.88%
0.12%
2.10%
3.76%
-1.66%
White
11.20%
4.39%
6.81% 9%
32.60%
-23.60%
Disability 5%
1.57%
3.43%

15. Improving Management Capacity
Completed the recruitment of key personnel:
Chief Financial Officer.
Four Executive Managers.

16. Strengthening of Management
Minister of
Labour
Director General
Non Executive
Board
Deputy Director General
Commissioner
CFO
Chief financial officer
Risk
mgt
CIO
Information
officer
OPS
Operations
FIN
FIN
FIN
FIN
Regional
office
Regional
office
Regional
office
Regional
office

17. Improving Institutional Infrastructure and Capacity
Key projects finalised and ready for implementation are;
Improved operational system (Siyaya) finalised and rolled out for national pilot in April 2005.
Integrated Financial Information system (Axsone) finalised and implemented in April 2005/06.
Independent review of the corporate form of the UI Fund completed and approved by Minister. Task team appointed for implementation in 2005/06.

18. Improving Accountability: Improved Audit Report for 2004/05
The Auditor General’s qualified Report is a positive departure from the previous three years of disclaimer.
Substantially reduced number of qualifications and matters of emphasis reflects improved systems of internal control.
Number of qualifications down (75%) to 2 from 8 and matters of non compliance down (68%) to 5 from 16 when compared to prior year.

19. Improving Accountability
Auditor General’s report when compared to previous years indicate substantial improvements in areas of management relating to;
Internal control environment
Accounting processes
Services rendered by the Department of Labour
Fixed Assets
General computer controls

20. UIF Operating Result – 2004/05 -R2bn Surplus-
2003/04
R’000
Revenue
6,831,267
6,096,336
Benefit expenditure
(2,475,504)
(2,093,870)
Other expenditure
( 532,188)
( 523,650)
Surplus before reserving
3,823,575
3,478,816
Transfer to reserves
(1,752,000)
(3,357,562)
Net Surplus
2,071,575
121,254

21. Financial Highlights for 2004/05
R Million
Percentage change
2004/05
2003/04
Contributions income
6,152
5,646 up 9%
Investments income
668
448
49%
Other Revenue 10 1
900%
Benefit Expenditure
2,475
2,094
18%
Administrative and other Expenses
312
281
11%
Staff Costs
219
243
down
-10%
Net Income before reserving
3,824
3,477
10%
Investments
9,759
5,389
81%
Reserves
10,197
6,374
50%
Total Assets
10,461
6,556

22. Growth in investments up 81%
2004/2005
2,620,052 investments
2003/2004 R
2002/2003
2001
- 255k deficit

23. Growth in Revenue up 9% 6.12 Five year revenue growth R bn 2004/2005
5.65
2003/2004
4.3
2002/2003
R bn
2001
2.8
2000
2.7
Five year revenue growth

24. Growth in Benefit expenditure up 18%
2.48
2004/2005
R bn
2.09
2002/2003
Benefit expenditure

25. Financial Sustainability
An asset liability study conducted by the Fund’s Actuary concluded the following;
Reserves required to meet potential future liability is estimated as R8,7bn at March 2005 as of that date the Fund had R10,2bn in reserves (R1,4bn above the required amount).
The Actuary also concluded the Fund is on a sound financial position on a cash flow basis for the next ten years.

26. QUESTIONS