NSF Dispensation

1

• NSF Dispensation
• Briefing to the
• Joint Standing Committee on Defence
• 4 May 2007

2
Agenda

• Background
• Addressing the queries of the Committee
• Requirements for NSF recognition
• Duration for processing an application
• Communication between HR Military office, policy
  implementation office, military service corps,
  Treasury
• Are there proposals within Treasury for a more
  feasible and sensitive pension scheme for the NSF
  members about to exit the SANDF
• What ideas / proposals are there for tax
  reduction for pensioned military personnel
• Statistical Overview
• Discussion and Questions

3
Background

• The intention of the NSF pension dispensation is
  
• To address the pension disparity between former
  non-statutory and former statutory forces as far
  as possible
• Definition of Non-Statutory Force member
• Former Umkhonto we Sizwe (MK) or Azanian Peoples
  Liberation Army (APLA) members
• Whose names appear on the certified personnel
  register or personnel list
• Who entered into employment agreement with any
  Government Department before the cut off date as
  applicable for respective employer departments

4
Background

• NSF Service is defined as the period between the
  date on which NSF member joined the respective
  former force as reflected in the service
  certificate and the date of taking up employment
  or entering into agreement with Government
  Department
• Service is only recognised for the period after
  the member attained the age of sixteen years
• NSF service period cannot overlap with
  contributing service periods
• NSF Service is recognised as additional service
  within the GEPF so that the broader benefit
  structure of the GEPF is enhanced by NSF service

5
Approval and Legislative Amendment Process

• PSCBC Resolution 8/98
• Address pension disparities which arose from
  previous discriminatory pension policies (R376m
  cap on NSF)
• Cabinet Approval (9/2000 at cost of R501m)
• Multiple age categories
• 7.5 member contribution
• PSCBC Resolution 12/2002 (R501m)
• Portfolio Committee on Finance (2003)
• Alternate scenarios tested
• Final dispensation approved in 2003

6
Approval and Legislative Amendment Process

• Government Employees Pension Law Amendment Bill 4
  of 2003 (National Assembly 11 September 2003)
• Special Pensions Amendment Bill of 2003 (National
  Assembly 11 September 2003)
• GEPF Rule amendments and funding were negotiated
  as part of PSCBC resolution 7/2003 (R768m)
• Amendment of the Income Tax Act (Tax free service
  before 1998)

7
Principles/Conditions of Recognition

• Provides for recognition of
• Service of less than 10 years to the extend of
  50
• Service of 10 years or more to full extent
• NSF members have the option to choose either
  Special Pension (S) or NSF Pension dispensation
  (within GEPF) a member cannot have benefits
  from both dispensations
• Adjustment of Benefits where Demobilisation
  benefits (D) was previously paid (Demobilisation
  Act 99/1996)
• A requirement for a members contribution (M) at
  5.
• A member has the option to pay S, D, and M
• As a lump sum
• As a series of payments overtime
• or not pay any one or all of those debts
• The effect of non-payment is that the NSF service
  is adjusted downwards

8
Requirements for NSF recognition

• Covered in Background

9
Duration for processing an Application
Receive Application Generate Benefit Quotation (BQ) Deliver BQ Select Choice Receive Completed BQ Benefit Calculation SARS Directive Pay Pension benefit Pay late Payment Interest
GEPF GEPF Member/DOD Member DoD GEPF SARS GEPF GEPF
1 1 7 ? ? 31 5 5 10
Undelivered Mail
Error Documents

• The processing of an application at the GEPF
  takes approximately 60 days after the submission
  of the documentation by the relevant employer
  department
• Closing date for applications originally
  September 2005, then extended to 31 March 2007.
• Now extended to 31 March 2008

10
Form of Communication

• DPSA Circular to the Heads of all National and
  Provincial Departments and Administrations -
  13/01/2005, 24/06/2005
• GEPF reminders send June, November 2005, March
  2007
• Road Shows (DoD/GEPF) - Distributions of
  application forms to DoD members (2004)
• Monthly meetings (Senior DoD/GEPF Management
  Officials)
• Weekly operational meetings (DoD/GEPF ongoing)
• Daily correspondence via letters, telephone
  enquiries and personal visits (GEPF Operational)
• Meetings on request by Secretary of Defence/DG
  National Treasury/GEPF
• GEPF Circulars to all Employer Departments
  Extension of cut-off date (from 30/09/2005 -
  31/03/2007) currently drafting new extension
  communication (31 March 2008)
• Live Information Portal between DoD and GEPF with
  summary statistics

11
Policy Queries

• Are there proposals within Treasury for a more
  feasible and sensitive pension scheme for the NSF
  members about to exit the SANDF?
• What ideas / proposals are there for tax
  reduction for pensioned military personnel?

• In respect of such proposals, the GEPF is in the
  hands of the policy makers
• In respect of tax on NSF dispensation within
  GEPF
• Income Tax legislation amended to recognise NSF
  service as pre-1998 (tax free)
• SARS recognises the total NSF member contribution
  as deductible in the year of payment
• Tax on previous benefits not re-paid

12
DOD Statistics as at 10 April 2007
  Total NSF Members Quotes Generated Quotes Issued to DoD Quotes Returned to GEPF NSF Periods processed NSF benefits paid
Total 21365 12440 11885 3065 1281 1212

Exited Members 7015 1864 1865 1706 1212 1212
Active Members (still in service) 14350 10576 10020 1359 69 Still in service

13
NSF Roll-out

• The following departments have received NSF
  applications forms and NSF quotations
• GCIS
• Foreign Affairs
• Correctional Services
• Home Affairs
• Gauteng Housing
• National Communication
• National Prosecuting Authority
• Regional and Land Affairs
• Social Development
• SAPS
• Intelligence Services

•  

14
NSF roll-out

• The following departments are in the NSF costing
  process with the Actuaries
• Eastern Cape Local Government
• Western Cape Provincial Government
• Western Cape Social Development
• Eastern Cape Department of Transport
• Eastern Cape Public Works and Roads
• Public Service Commission
• Local government and Traditional Affairs
• Department of Justice
• Limpopo Legislature
• SARS
• Department of Agriculture
• GSSC
• Gauteng Premiers Office
• Gauteng Department of Agriculture, Conversation
  and Environment

•  

15
Thank You Questions and Discussion