1. UNEMPLOYMENT INSURANCE FUND PRESENTATION TO THE PORTFOLIO COMMITTEE ON LABOUR 16 &17-10-2014 ANNUAL PERFORMANCE REPORT 2013-14

2. Chief Directorate Communication | 2011.00.00 CONTENTS Vision and Mission Legislative Mandates Human Resources Management Risk Management and Internal Audit Operational Performance Summary of Performance Report against the 2013-14 Annual Performance Plan Summary of the 2013-14 Financial Performance Summary of 2014-2015 Quarter 1 Report

3. Vision & Mission Vision The Unemployment Insurance Fund strives to contribute to the alleviation of poverty in South Africa by providing effective short term unemployment insurance to all workers who qualify for unemployment and related benefits Mission The central purpose and role of the Unemployment Insurance Fund is defined as: Rendering an effective accessible service to all stakeholders Being a sustainable organisation with sufficient reserves Administering the Fund professionally

4. Legislative Mandates Unemployment Insurance Act, 2001 as amended The Unemployment Insurance Fund (UIF) was established in terms of section 4(1) of the Unemployment Insurance Act, 2001 (Act 63 of 2001) as amended The Act empowers the UIF to register all employers and employees in South Africa Unemployment Insurance Contributions Act, 2002 Section 8 of the Act empowers the SARS Commissioner to collect monthly contributions from both employers and workers who are required to register as employers in terms of the fourth schedule to the Income Tax Act and who are liable for the payment of the skills development levy in terms of the Skills Development Act, 1999 (Act 9 of 1999). Section 9 of the Act empowers the Unemployment Insurance Commissioner to collect contributions from all those employers who are not required to register as employers in terms of the fourth schedule to the Income Tax Act and who are not liable for the payment of the skills development levy in terms of the Skills Development Act, 1999 (Act 9 of 1999).

5. HUMAN RESOURCE MANAGEMENT No of employees% Vacancy 2012/132013/14 ActualApproved Posts ActualVacancies Top Management11100.0 Senior Management 142415937.5 Professional Qualified 65104812322.1 Skilled91118853328.0 Semi-skilled240257235228.6 Unskilled111311215.4 Total4225174288917.2

6. Staff Compliment (517)

7. Employment Equity (Women/Men)

8. Employment Equity cont…

9. Skills Development

10. Risk Management During the year under review, risk and fraud awareness campaigns were conducted in all provincial offices and Labour centers. A total of 76 fraud allegations were received via the fraud hotline, 69 were investigated and finalized, translating to a 90% case finalization rate. The Fund has a formalized Fraud Prevention Plan to prevent, detect and investigate fraudulent activities, to protect the assets and other resources from any unethical conduct. The Fund has also partnered with other law enforcement agencies, e.g., SAPS and Commercial crimes unit. 10 Cases ReceivedCases investigated & finalizedOutstanding 76697

11. Internal Audit The Fund has a constituted Audit Committee in line with the PFMA and the best practice on corporate governance requirements. Internal audit provides the Audit Committee and management with the assurance that the internal controls are adequate and effective. Through the internal audit reports, the committee was satisfied with the systems of internal controls both financial statements and performance information. 11

12. OPERATIONAL PERFORMANCE

15. Claims Turn Around Time (01 April 2013 to 31 March 2014) The UIF set the target to finalise 85% of claims within five weeks of receipt and for the year under review achieved 86%

16. Payment per Benefit Type 80% of the total claims payment is for Unemployment. The analysis proves that most of the claimants of unemployment is coming from construction and trade industries.

17. Online- Claims To improve service delivery the UIF developed an online system where clients submit claims and request for payments at the comfort of their homes or offices-no need to queue.

18. LABOUR ACTIVATION PROGRAMME: TRAINING LAYOFF SCHEME The Training Layoff Scheme started in 2009 and since inception the Fund has assisted 47 companies as follows:

19. FUNDS BUDGETED vs. ALLOCATIONS (VALUE OF APPLICATIONS)

20. COMPANIES SUPPORTED PER PROVINCE

21. PARTICIPATION PER SETA

22. OVERALL UIF PERFORMANCE REPORT AGAINST THE 2013-14 ANNUAL PERFORMANCE PLAN STRATEGIC OBJECTIVES FINANCIAL YEAR 2013/14 ACTUAL OUTPUT - VALIDATED Overall Achievement Planned Indictors B/F Total Indicators Achieved Partially Achieved Not Achieved Fund Poverty Alleviation Schemes 505212 40% Improve Governance 505410 80% Strengthen the Institutional Capacity of the Fund 606411 67% Encourage Compliance through Service Delivery 606600 100% Improve Stakeholder Relations 404400 100% OVERALL PERFORMANCE 260 2033 77 %

23. Strategic Objective 1: Fund Poverty Alleviation Schemes The Minister of Labour approved and launched 9 training initiatives and committed R300 million for training of these unemployed beneficiaries. The R 4 billion UIF/IDC partnership has resulted in 21,192 jobs saved and 23,268 jobs created since the inception of the partnership in 2009. The proposal to create a Labour Activation Fund was submitted to the Minister on 31 March 2014 and approval to proceed to the next step of feasibility approved. PERFORMANCE REPORT AGAINST THE 2013- 14 ANNUAL PERFORMANCE PLAN

24. Strategic Objective 2: Improve Governance 90% all fraudulent cases were investigated and finalized during the financial year Internal Audit were conducted in 28 offices with 90% of reports presented to and signed off by management. Implementation of improvement recommendations is in progress. Strategic Objective 3: Strengthen the Institutional Capacity of the Fund 88% of planned training interventions as per the Work Place Skills plan implemented by end of year. Establishment of the Fund has 3.7% of People with Disability Establishment of the Fund has 23% of the Youth

25. PERFORMANCE REPORT AGAINST THE 2013-14 ANNUAL PERFORMANCE PLAN Strategic Objective 4: Encourage Compliance through enhanced service delivery 86% of claims finalised (approved or rejected) within five weeks of application A total of 4043 registered employees used uFiling to submit claims by the end of March 2014 – An increase of 84% compared to last year 34% increase in Employers using U-Filing to declare and pay contributions as compared to prior year A total of 61 198 new employers were registered by the end of March 2014 – An increase of 4% 11.8% increase in contributions revenue to R 15,3 billion as compared to the previous year by March 2014

26. PERFORMANCE REPORT AGAINST THE 2013-14 ANNUAL PERFORMANCE PLAN Strategic Objective 4: Improve Stakeholder relations Provincial communication campaigns were conducted in all 9 provinces by the 31st March 2014 to create awareness in the community Multi-Media campaign had a reach of 41 million people according to GCIS/All Media Survey by March 2014 36 Community Radio Stations were utilized during the Workers’ Month campaign 4 MOUs have been signed between UIF and external stakeholders to improve service delivery efforts

27. Financial Performance Highlights 2013/2014 31 March 2014 (R‘000) 31 March 2013 (R‘000) Increase/ decrease % Increase/ decrease Contributions15,309,36313,687,497 12% Investment income5,452,1814,660,361 17% Benefits expenditure7,079,5876,013,886 18% Net surplus11,936,24016,006,304 -25% Investments93,414,43181,006,527 15% Technical reserves18,097,37116,465,787 10% Accumulated surplus72,316,99562,012,339 17% Total assets94,300,87781,848,523 15%

28. STATEMENT OF FINANCIAL PERFORMANCE Revenue has increased by 12% year on year. Revenue include R234 million in penalties and interest paid by non complying employers during the 2013/14 financial year. Major portion of contributions is made up of SARS Employers. Inadequate enforcement of compliance to the Unemployment Insurance Act and the Unemployment Insurance Contributions adds to the slow growth in the Non SARS employers 1%

29. STATEMENT OF FINANCIAL PERFORMANCE Benefits paid have increased by 18% compared to the previous year, largely due to the increase in the number of claims approved and paid during the financial year as well as the increase in the earnings ceiling. The number of claims approved increased to 762 285 from 731 131 reported in the last financial year. Unemployment benefits (R5,7 billion) make up 80% paid during financial year. 8%

30. STATEMENT OF FINANCIAL PERFORMANCE

31. Non exchange revenue comprises the IT Assets that were transferred to the UIF by the Department at the end of the PPP with EOH. Other income is made up of the sundry income which include rental income from the Fund’s investment properties, with the rental income making up 69% of the total other income Other incomes includes recoveries on written off debt, proceeds on disposals and PPP Reinvestment Fund 2%

32. STATEMENT OF FINANCIAL PERFORMANCE Included in the administration costs are SARS Commission (R208 million), Computer Services (R72,9 million), Bad Debts (R41,7 million), Stationery and Printing (R12,5 million), Training and Staff Development (R5,1 million). The administrative expenditure has increased by 16% compared to the last financial year mainly due to the increase in DoL split percentages. The administration expenditure of R382 million against a budget of R422 million, a 9% under expenditure. -9%

33. STATEMENT OF FINANCIAL PERFORMANCE Included in the other operating costs are Investment and portfolio management fees (R51,2 million), uFiling costs (R11,5 million), Municipal Services (R16,1 million), Communication costs (R23,5 million) and Operating leases which includes PPP fees (R128,8 million) The other operating costs has increased by 19% compared to the last financial year, mainly due to the increase in DoL split percentages and the settlement of EOH PPP claims. The other operating costs of R312 million against a budget of R346 million, a 9% under expenditure. -10%

34. STATEMENT OF FINANCIAL PERFORMANCE The employee costs has increased by 19% compared to the last financial year, mainly due to the increase in DoL split percentages. It comprises of costs for the 469 UI HQ staff and the split percentages paid to the Department of Labour for the 6000+ staff The employee costs of R772 million against a budget of R833 million, a 7% under expenditure. -7%

35. STATEMENT OF FINANCIAL PERFORMANCE

36. Investment Revenue Investment revenue increased by 17% compared to last financial year, an exceeded the budgeted revenue by 4% Investment revenue comprises of Interest on financial assets (R4,9 billion), dividends (R 654 million) and Interest from banks (R15 million) Fair Value Adjustments It includes unrealised profits (R2,7 billion) on equity investments and unrealised losses (R 3,4 billion) on bonds and money market instruments. There was a realised profit (R967 million) on sale of some financial instruments. 4%

37. STATEMENT OF FINANCIAL PERFORMANCE Finance costs represent the provision made on the interest payable in the Masha and 33 others case. Net surplus has decreased by 25% but was 25% above the budgeted amount of R9,6 billion. Major contributor to the reduction in net losses was the decrease in fair value adjustments 25%

38. STATEMENT OF FINANCIAL POSITION Non Current assets have increased by 15 % compared to the prior financial year Included in the non current assets are long term investment instruments which include Bonds with maturity longer than 12 months (R58,7 billion) and property, plant and equipment (R105,6 million less the accumulated depreciation of R46,6 million) Intangible assets include the Intellectual property for the uFiling system (R14,6 million)

39. STATEMENT OF FINANCIAL POSITION Current assets have increased by 15 % compared to the prior financial year Included in the current assets are short term investment instruments (R34 billion) which include equities, bonds and money market instruments with maturity less than 12 months. Interest (R80,8 million), Fixed deposits (R9,3 billion) Trade and other receivables include and other receivables like unpaid contributions from National Treasury, overpayments debtors and sundry debtors. Cash and cash equivalents include money held in PIC Current Account (R1,0 billion)

40. STATEMENT OF FINANCIAL POSITION

41. Technical Reserves They represent the unearned premium reserve (UPR) which is part of the current year’s contributions that relates to the risk period that extends over the following four years. Determined based on an actuarial valuation. Accumulated Surpluses Increased by 17% compared to the prior financial year and this largely due to savings on expenditure, increase in contributions and investment revenue.

42. STATEMENT OF FINANCIAL POSITION

43. Increased by 9% compared to the previous financial year Included in the current liabilities is the provision for staff leave. This relates to the capped leave that staff had prior to June 2000 where employees are limited from using the leave days during their working life. The increase is based on the fact that the capped leave payable is based on the salary notch at the time of valuation or termination.

44. STATEMENT OF FINANCIAL POSITION Increased by 15% compared to the prior financial year Included in the current liabilities is the benefits payable (R2,9 million) and outstanding claims liabilities (R3,6 billion) which represent benefits incurred but not reported and the benefits approved but not paid at year end. Trade and other payables includes the DoL claim (R103 million) for the month of March 2014, amounting to which had nor been paid at the end of financial year.

45. The UIF Quarter 1 Report (Performance Information) for the Financial Year 2014/15 2014.09.02

46. 46 QUARTER 1 PERFORMANCE PER INDICATOR STRATEGIC OBJECTIVES ACTUAL OUTPUT - VALIDATED Overall Achievement Planned IndictorsAchieved Partially AchievedNot Achieved Improve governance 30120% Strengthen institutional capacity of the fund521240% Improve stakeholder relations30300% Encourage compliance through enhanced service delivery613216% Fund poverty alleviation schemes40220% OVERALL PERFORMANCE 213108 14% PERFORMANCE % 14%48%38%

47. Human Resources Quarter 1 Report 2014-2015