The Government Employees Pension Law Amendment Bill seeks to amend the Government Employees Pension Law, GEPL, of 1996, in order to achieve the following objectives: firstly, to provide for the insertion of a new definition, which is "pension interest" as outlined in the Pension Funds Amendment Act of 2007; and to amend the current definition of "employer" to address matters relating to the application of the revised nonstatutory forces, NSF, special dispensation, which was adopted by the Cabinet in 2009 and 2010.
Secondly, it seeks to provide for the payment of pension interest to a former spouse of a member upon a divorce or the dissolution of a customary marriage. The Bill also seeks to amend the powers of the board to make rules and amend the provision providing for the recognition of pensionable service of a former member of the NSF. These amendments are trying to bring the GEPL in line with the Pension Funds Act. The amendments, among other things, will amend the GEPL to provide for the implementation of the "clean break" principle. The "clean break" principle, as outlined in the Pension Funds Amendment Act of 2007, means that the pension share must be included in the divorce claim by a valid court order and must be paid to a nonmember spouse at the date of divorce, and not when the member exits the fund.
Currently, the Government Employees Pension Fund, GEPF, does not allow the former spouse of a member to claim a portion of a member's pension interest in terms of a divorce order, or an order for the dissolution of customary marriage, soon after the divorce order is granted. The former spouse can only receive a portion of the member's interest after the exit of the member from the GEPF.
Lesi sichibiyelo sokufaka umgomo wokuhlukanisa ngokupheleleyo obizwa nge- "clean break principle" ngolwasemzini, kulo mthetho ochitshiyelwayo uzosiza kakhulu ukushintsha izimpilo zabantu bakithi, ikakhulukazi abantu besifazane.
Uma ulandela umlando wethu kuleli lizwe, ububha nomuntu omnyama kubukeka kuyinsakavukela umchilo wesidwaba, okuyinto ebonakala ingeke ihlukane naye. Abantu besifazane bona bathinteka kakhulu, uma sikhuluma ngobubha. Imibiko yezinhlangano ezizimele kuleli lizwe nasemhlabeni wonke iyakufakazela lokhu. Uma ukhuluma ngabantu abasencindezini ngokungafakwa kwalesi sichibiyelo ukhuluma ngomama, ikakhulukazi labo ababeshade nabasebenzi bakahulumeni abahlukaniswa ngezimo ezaziwa yibo. Lawa makhosikazi awakwazi ukuthola amalungelo awo ukuze akwazi ukuqhubeka nempilo. Ngikhuluma ngalabo ikakhulukazi abaqhamuka esizweni esimnyama.
Iningi labo alisebenzi liphoqeleke ukuthi londle abantwana babo ngokuthi bahambe becela iminikelo komakhelwane nasemindenini yabo. Lokho-ke sikubona kwehlisa kakhulu isithunzi somuntu wesifazane kuleli lizwe.
Sithi lokhu bekungafanele ukuthi kuyenzeka ngoba laba bantu besifazane banelungelo lokuthola ingxenye empeshenini yalabo ababe ngabakhwenyana babo. Ikakhulukazi ngemuva kokuchibiyela uMthetho weSikhwama seMpesheni.
Lesi sichibiyelo ngeke sishintshe kuphela izimpilo zabesifazane kuleli lizwe, kodwa nabantwana ikakhulukazi labo abahlala nonina. Iningi lalezi zingane uthola ukuthi azikwazi noma azikwazanga ukuqhubeka nemfundo yazo ngenxa yokuthi omama abanaw o amandla okuqinisekisa ukuthi abantwana babo bathola imfundo ngendlela okufanele bayithole ngayo. (Translation of isiZulu paragraphs follows.)
[This amendment to include the principle of full separation, called the "clean break" principle, will help a lot to improve people's lives, especially those of women.
If you look at the history of this country, poverty amongst black people is very common, the two seem to be inseparable. Women are more affected by poverty. Reports of local independent organisations and global ones support this.
Women, especially those who were married to public servants, who got divorced for reasons known only to them, are the ones most affected by the noninclusion of this amendment. These women are not able to enjoy their rights so that they can continue with life. I am referring more to those who are black.
Most of these women are not employed and are forced to raise their children by asking for assistance from neighbours and their families. This is very degrading to the image of the women in this country.
We are saying that this should not have been happening because these women have a right to get a portion from the pensions of their former husbands, especially after the amendment of the Pension Funds Act.
This amendment will change not only the lives of this country's women, but also the lives of the children in their care. You will find that most of these children cannot or could not continue with their education because their mothers are or were poverty-stricken and can't ensure they get the type of education they deserve.]
Iphinde ke ibe yingxaki kakhulu kwabo bangootata baba bantwana, nanjengoko imitshato ingapheli kamnandi. Uye athi utata akuhlukana nenkosikazi yakhe abaleke angafuni nokusondela kulowo wayengumfazi wakhe. Loo nto ke iye ikhathaze abantwana kuba uye utata alibale ukuba unoxanduva lokondla abantwana, ukuqinisekisa ukuba baphila impilo entle. Lo mthwalo uphela uiba ngumthwalo woomama ngokungathi bona basela amarhewu kwavela abantwana.
Ngoko ke, siyasincoma isigqibo seNgxowa-mali yoMhlalaphantsi wabaomSebenzi bakaRhulumente sokulungisa lo mthetho, ngokuba zininzi iimpilo eziza kutshintsheka ngenxa yolu lungiso lo mthetho. Kungoku nje iNgxowa-mali yoMhlalaphantsi wabaSebenzi bakaRhulumente ihleli nezicelo ezingaphezu kwama-5000 zabantu abangoomama abohlukana namadoda abo angamalungu eNgxowa- mali yoMhlalaphantsi wabaSebenzi bakaRhulumente. Ngoko ke ukuba le Ndlu ipasisa lo mthetho, iza kuba ihamba nkqo ngemigaqo kaKhongolose yokwakha impilo ephucukileyo kuye wonke umntu.
Sizifumene izikhalazo singamaLungu ePalamente, iinkundla zaseMzantsi Afrika zizifumene izikhalazo ezisuka koomama zibuza ukuba kutheni oomama abatshate namalungu eNgxowa-mali yoMhlalaphantsi wabaSebenzi bakaRhulumente bexhatshazwa bangakwazi ukufumana am alungelo abo xa bahlukene nabayeni babo. Oku kulungiswa komthetho kuphendula zonke izikhalazo kunye nesigqibo senkundla esasiphendula oomama sokuba kulungiswe umthetho ukuze bakwazi ukufumana izinto ezingamalungelo abo.
Enye into ekufuneka ukuba siyicacise koku kulungiswa komthetho kukuba akufikanga kule Ndlu ngenxa yesigqibo senkundla, inkundla ithathe isigqibo emva kokuba iNgxowa-mali yoMhlalaphantsi wabaSebenzi bakaRhulumente ibisele iqalile ngenkqubo yayo yokuzisa isilungiso apha kule Ndlu yamalungu ahloniphekileyo.
Okuhle ke emasikuthethe singuKhongolose, phambi kokuba siphelelwe lixesha, kukuthi siyakuxhasa ukulungiswa kwalo mthetho kuba kuza kutshintsha impilo yoomama kunye nempilo yabantwana eabeabengakwazi ukufumana imfundo ukuze baphile impilo ephucukileyo. Siwuxhasa kakhulu ngokuba kukulungiswa komthetho, kwaye sihamba ngqo nomgaqo-nkqubo kaKhongolose wokwakha impilo ephucukileyo kuye wonke umntu. Sithemba ukuba le Ndlu iza kuwuxhasa lo mthetho. Siyabulela. [Kwaqhwatywa.] (Translation of isiXhosa paragraphs follows.)
[Again, this becomes a problem, especially to the men who are fathers of these children, because the marriages do not come to an end amicably. When a man divorces his wife, he wants to stay as far away from her as possible. This has an adverse effect on the children, because the father forgets that he has the responsibility to provide for his children and to ensure that they lead quality lives. This eventually becomes a burden on women, as if they conceived the children through magic.
We therefore recommend the decision taken by the Government Employees Pension Fund to amend the Act, because it will make a difference in many lives. As it is, the Government Employees Pension Fund has received more than 5 000 applications from women whose ex-husbands are members of this fund. Now, if this House passes this Act, it will be following the policy of the ANC, which is to create a better life for all.
We have received complaints as Members of Parliament. The South African courts have also received complaints from women who are asking why women who have been married to members of the Government Employees Pension Fund are taken advantage of and why they can't receive their rightful benefits when they divorce their husbands. This amendment responds to all those complaints and the court decision, which was also a response to the women that the Act be amended so that they can get their rightful benefits.
One other thing we need to explain is that this amendment did not come to the House because of a court decision, but the court took the decision after the Government Employees Pension Fund had already started with its process to ask this House for an amendment of the Act.
As the ANC, we must say, before our time expires, that we support the amendment of the Act, because it will change the lives of women and children who could not access education in order to live a better life. We support it because it is an amendment, and it is in line with the policy of the ANC, which is to create a better life for all. We hope that the House will support the amendment. Thank you. [Applause.]]
Deputy Speaker, the Government Employees Pension Fund is a defined benefit arrangement where the pension payable on retirement is calculated according to the number of years' service and final pensionable salary. The state is the sponsoring employer, and if a shortfall arises between the assets held in the fund and its liability to pay benefits to its members, the state acts as its underwriter. The people of South Africa thus pay for any top-ups to fill any financial holes that may arise in the fund.
The Bill proposes two key amendments to the fund. The first relates to the so-called "clean break" principle on divorce. Before the Pension Funds Act was amended in September 2007, a divorced couple was not able to separate completely at the time of divorce if one of the spouses received a portion of the other's pension fund as part of the divorce settlement. The fund's administration was informed of the amount awarded to the former spouse of a member and this benefit was retained in the fund until an exit event occurred on the withdrawal, retirement or death of a member. This prevented a clean break for the divorced couple and often led to administrative errors and payment delays.
The Government Employees Pension Fund is not subject to the Pension Funds Act and was therefore not amended to provide for the clean break. This amendment resolves the problem and permits access to the benefit by the former spouse at the time of divorce. Unlike the Pension Funds Act, the tax position is not clarified and would require an amendment to the Income Tax Act that has not been included in the Taxation Laws Amendment Bill for 2011. The committee was informed that this would be included in 2012, but there is no reason why it cannot be done in 2011, given that amendments to it have not yet passed through this House.
The Government Employees Pension Fund needs to be more closely aligned with, if not subject to, the Pension Funds Act, particularly given that it does not permit members to access the Pension Funds Adjudicator or benefit from precedents from the adjudicator. The DA supports the "clean break" principle and this part of the amendment.
The second part of the amendment seeks to enable the revised nonstatutory forces pension dispensation that abolishes the need for former nonstatutory force members to contribute to the funding of the recognition of their past service and to recognise the full period of nonstatutory force service. This increases the benefit payable at retirement and the fund's liabilities.
In 2008, the Special Pensions Amendment Act was passed to extend special pension provisions enacted in 1996 to younger recipients. The intention of the special pension was to compensate for the gap in pension provision that arose when freedom fighters were in the field instead of in employment and contributing towards their provision for retirement. Means testing was not included and this has resulted in the unintended consequence that it is paid to many who do not require it to supplement their pension provision. Fraud and corruption, including fabricated biographies, were rife and 4 976 applications remain in backlog.
In response to our concern over cost implications, the fund actuary estimated that the additional liability owed to the fund by respective departments and institutions is R4,735 billion as at 31 December 2010. However, R1,644 billion has already been paid by employers and R1,011 billion is held in reserve for past discriminatory practices. The total liability is therefore R7,390 billion. An immediate cash injection of R1,378 billion is required to maintain the fund's funding requirement. This is in respect of members who have already exited the fund. So, the liability has already been incurred.
These numbers are based on details provided by the Government Pensions Administration Agency and, according to the National Treasury, may change in the future as more members who qualify for nonstatutory force service come forward or if the records are not correct. The National Treasury would need to conduct an actual diligence exercise to verify the costs and, we are told, this will be concluded by December 2011. Before the National Treasury can reimburse the fund for the additional liability, Parliament will need to appropriate funds for this purpose.
The amendment before us has therefore not been conclusively costed, nor are we certain that funds would be appropriated for this purpose. The amendment commits spending on an uncertain number with uncertain funds. This is irresponsible lawmaking. Although the final verification has not been completed, it appears that the calculated liability does not include provision for accelerating salary increases that escalate the total defined benefit payment.
We agree that redress is required, but the method proposed is a very blunt instrument and caters for groups rather than individuals. To resolve this, a lump sum payment to the benefit of deserving individual recipients against an appropriate means test can be implemented. In the proposed format, Parliament is signing a blank cheque that the people of South Africa must pay the price of basic service delivery to the poorest members of our society.
There is no reason why an amendment to provide for a clean break cannot be enacted on its own. If it were, the DA would support it. However, we cannot support the entire amendment as it currently stands. [Applause.]
Deputy Speaker, Cope will support, with some hesitation, the amendment to the Government Employees Pension Laws Amendment Bill, dealing specifically with nonstatutory services members. It is important for National Treasury to conduct an appropriate actuarial and thorough diligence exercise as soon as possible to verify the records supplied and the costs of all nonstatutory services.
Hon Deputy Minister, this process must be a thorough one. Otherwise, a too- high cost may cripple the process. This would not only affect the budget but, if the pension fund is not properly funded, it may harm government employees in general. We cannot allow this. So, the verifying process by the National Treasury becomes a very important tool and Cope will closely watch the department on this issue. The monies that were mentioned by the hon George are large amounts and we look for your guidance to make sure that this money is well spent.
The "clean break" principle did not exist previously and it was unfair that, while members' benefits increased after the divorce order was granted, this was only payable when the member retired. This increase did not apply to the portion allocated to the nonmember spouse. Our only concern is that the nonmember portion, when paid out, becomes cash and there is no requirement for the lump sum to be preserved as a future pension. This is wrong, and it could lead to divorces of convenience just to pay the family debt. We urge the department to amend the Pension Funds Act as soon as possible to allow for this. It would have been better to wait for such an amendment, but we understand the predicament of many nonmember spouses and will support this amendment.
Deputy Speaker and hon members, I have always wanted to say "and people in the gallery" and today I can say that, because there are some in the gallery. I've noticed some colleagues come here and talk about people in the gallery while there is nobody in the gallery. However, coming back to the business of the day, the IFP will support the amendments contained in this Bill. However, we are also concerned about the cost implications, which hon George has indicated and where there will be an additional liability of R4,735 billion to National Treasury. I hope that an in-principle decision has been taken by the Ministers' Committee on the Budget, MinComBud, to provide this additional funding in 2012, otherwise this Bill cannot be enacted in the form that we think it will be.
I would also like to say we support the "clean break" principle. I understand that this already applies to the Political Office Bearers Pension Scheme, where this principle is in effect. But the question is: Is there such a thing as a clean break? What if people who are divorced today find in a year's time that they want to get back together? What happens then?
Furthermore, I am aware - and colleagues might be aware - of divorce arrangements that take place for convenience; people live together all their lives, but legally they are divorced. They do that for various reasons, some being business reasons, tax avoidance and so forth. I do hope that this enactment here does not allow these loopholes to be exploited, where people would see a cash cow in the pension fund and decide to divorce, take half the money and continue living together. These are some of the things that will have to be monitored very closely by the pension fund board itself over time.
In essence, though, we support the principles that are contained in this pension law amending Bill.
Madam Deputy Speaker, the ACDP will support this Bill. In particular we support the "clean break" principle, which allows the nonmember spouse to claim and receive a portion of the member's interest that is assigned in terms of the divorce order. Clearly, however, we share the concerns about divorces of convenience because that could impact vulnerable women at a later stage. We are also concerned about the issue of taxation, particularly for vulnerable women, and those aspects need to be clarified in later legislation.
We believe, however, that with the "clean break" principle, the benefits outweigh the detriments, particularly when it comes to vulnerable women who stay at home to raise children and will now, upon divorce, be able to obtain their share without delay.
The second aspect related to the proposed amendment of the revision of the nonstatutory forces, which entails the pensionable service of former members of those forces, is that that will now be recognised. We fully appreciate and support that, but we do believe the costing needs to be closely looked at for the cost implications. However, the ACDP will support this Bill.
Thank you, hon Speaker, hon Ministers, Deputy Ministers and hon MPs, in their work to determine the essence of the disarmament, demobilisation and reintegration of former combatants, authors Spears and Carvalho both concurred that if the government of the day doesn't ensure that former combatants find a livelihood and submitted to the laws and norms that govern civilians, it runs the risk of having combatants that may have difficulty in finding a productive position in the legal civilian economy. They may also develop an oppositional stance towards society and government.
In our response to this reality, as the ANC-led government, we started by establishing an inclusive South African National Defence Force. The SANDF, as it is commonly known, was formed through the integration of seven former forces in April 1994. Five of these forces were statutory forces, while the other two, namely the glorious uMkhonto weSizwe, MK, and the Azanian People's Liberation Army, Apla, were nonstatutory forces, NSF.
The principle of eradicating the imbalances of the past has been the linchpin of our integration process. Guided by this noble principle, we dealt with a special pension provision and it took the following trajectory.
Before the integration of the forces, the statutory force members were contributing to the Government Employees Pension Fund, GEPF, and stood to receive pension benefits on termination of their service. The former NSF members, on the other hand, did not have the opportunity to contribute to any pension fund. This created a disparity between the former NSF members and the former statutory force members in as far as pension benefits were concerned.
At its meeting of 24 November 2010, the Cabinet approved the tabling of the report of the Interim National Defence Force Service Commission. This report follows Cabinet's decision to create a new service dispensation for the Defence Force.
Following that decision, the interim National Defence Force Service Commission was established, among other things, to advise and make recommendations on a unique service dispensation outside the ambit of the Public Service. The report covers challenges faced by the SANDF since 1994, the root causes of the problems and proposed short-term and long-term solutions.
Cabinet approved the extension of the revised NSF pension dispensation to cover all former NSF members who entered into an employment contract with other government departments and institutions that contribute to the Government Employees Pension Fund. The Cabinet furthermore approved the alignment of the current Special Pensions Act and Government Employees Pension Law to enable recognition of the NSF service of affected current and past employees.
The intention of the NSF pension dispensation is therefore to address disparities in the fairest manner possible. In other words, the intention is to put the former NSF members who joined the Public Service in the same position as former statutory force members for pension purposes, as far as possible.
The Local Government Employees Pension Law Amendment Bill, the one we are currently dealing with, seeks to amend certain aspects of the Government Employees Pension Fund. The object of this Bill is, inter alia, to amend the provisions for the recognition of pensionable service of former members of nonstatutory forces or service.
One of the established areas, which became extremely visible with hindsight but was not so before, is that the current provision states that former members of the statutory forces or services must, in accordance with the rules, apply for the fund to have their services as members of statutory forces recognised as pensionable service. The effect of this is that the services rendered by members of the NSF may either be recognised or not, their assessment being based, of course, on the rules of the current fund.
This Bill seeks to enable the implementation of the revised NSF pension dispensation because in 2010 Cabinet once more approved the revision of this particular dispensation. According to the revised approval, it firstly provided for the abolishment of the need for former NSF members to contribute to the funding in recognition of their NSF service by the GEPF.
Secondly, it provided for the recognition of the full period of NSF service by all former NSF members who were subsequently employed by government departments and institutions that contributed to the fund. It also provided that special pension benefits paid to qualifying members who are still in the service should cease at exit and that members should receive their full benefits in accordance with the fund's rules.
To realise these objectives the Bill amends section 30(a)(2) of the principal Act. The amendment indicates that the benefits payable to members of the NSF shall not be reduced by the amount of any benefit received in terms of the Special Pensions Act and that members' eligibility to receive any benefit in terms of the Special Pensions Act shall cease on exit from the fund.
In conclusion, it is our submission as the ANC that the provisions of this Bill will enable us to fast-track the improvement of the welfare of our ex- combatants. This Bill concurs with the clarion call made by gallant fighters of uMkhonto weSizwe to mazilunge izinto zamakhomanda [let the matters of the commanders be addressed]. As the ANC we think that this will definitely ensure that this particular aspect is addressed.
Before I conclude, cognisant of the fact that I still have time left, I think I must take this opportunity to urge various ex-combatant formations to take a keen interest in ensuring that all their members take advantage of these new provisions. They must also assist to ensure that. One of the problems that is currently faced by the administrators of the fund is incomplete applications and the fund members are struggling to trace some of the applicants. We are urging ex-combatant formations to assist in this regard. This will help a lot in terms of dealing with the problem that has been identified by the fund itself.
On the issue of liability, I obviously expect the Minister to deal with the details of the sustainability of this particular provision for NSF members. On a lighter note, one might argue that the recently proposed so-called Tutu tax, a recommendation of the TRC, must be considered to deal with aspects of liability, as raised by my former colleagues. I really think that the impression that has been created throughout the presentations and engagements on this matter is that our financial depth is quite adequate to cater for such a provision.
As members of the standing committee, and as correctly cited by one of the speakers, our responsibility is to ensure that we oversee how this particular process will be sustained going forward. As the ANC, we support the Bill and call for its expeditious implementation.
Deputy Speaker, I would like to thank the committee for the work they have done in processing this Bill to the point that we are here today, considering it in the House. As all members have correctly pointed out, it primarily seeks to provide for the implementation of the "clean break" principle on divorce and pensions, which is currently not provided for, as well as for the implementation of the revised nonstatutory forces pension dispensation, as was approved by Cabinet.
The main issue raised by other parties seems to be the financial implications. Let me start by saying that the matter before the House today is but one of those matters that seek to address and redress the disparities of our past. Therefore the issue of financial implications has actually been looked at and, as National Treasury, we have undertaken to proceed with actuarial due diligence, as even hon George has indicated.
But I don't think it is fair to say that this is an irresponsible way of processing legislation. We did indicate that, as we proceed with the uptake - as in all pension matters - it won't place undue pressure on our fiscus. This is not the first pension matter that we have processed, and we have done so in the past.
I want to say that our former combatants paid a price that cannot be equalled by the amounts that we are talking about today, be it R7 billion or R4,7 billion. Whatever the figure, which is still to be verified, our combatants paid with their lives to bring about the liberation that we enjoy today. [Applause.]
I therefore think this House will take to heart that this is the time to bring about equity and fairness and to make sure that our former combatants are not left out there, while the people who served the system have been taken care of. [Interjections.]
Some concern was also expressed about the fact that the cost implications had to be appropriated by Parliament. Indeed, no appropriation will be carried out without coming through to this House. So, it is Parliament that will deal with this. We also indicated that it will be National Treasury's Budget Programme 7 that will carry the costs, and not the respective departments, as has been misrepresented here.
I do not want to bore you with the figures, because at the end of the day they will also still have to come to Parliament. But we would like to take this opportunity to thank the committee for having processed this legislation and Parliament for considering it today and for appreciating its urgency and importance in addressing these issues.
Regarding the "clean break" aspect, we have a court case, as you might know, which also necessitated that this matter be dealt with expeditiously.
Debate concluded.
Question put: That the Bill be read a second time.
Bill read a second time (Democratic Alliance dissenting).