A S Van Rheede Van Oudtshoorn Petition: National Treasury; Government Pensions Administration Agency, Department of Justice briefings

Meeting report

AS Van Rheede Van Oudtshoorn Special Petition
National Treasury (NT) briefing
Ms Jeanine Bednar-Giyose, Director: Legislation, National Treasury, briefed the Committee on the legal and financial implications of the petition by Ms A S Van Rheede Van Oudtshoorn, who had made a special petition to the Committee.

The facts of the petition relied on the following: Ms Van Rheede retired on 30 June 2010 after having been permanently employed in the Department of Justice and Constitutional Development (DoJCD or the Department) for a total period of nine years and nine months. She contributed to the Government Employees Pension Fund (GEPF) during that time, and on her retirement on 12 August 2010 was paid the lump sum payment due, for that period of nine years and nine months. Ms Van Rheede requested recognition of three months non-pensionable period of service, so that she would then have ten years of service and be able to qualify to receive a pension annuity as well as a lump sum gratuity.

Ms Bednar-Giyose explained that the Rules of the Government Employees Pension Fund (GEPF) were applicable to the pension benefits that Ms Van Rheede would be entitled to receive, and Public Service Bargaining Council Resolution was applicable to the medical benefit payments she would be entitled to receive.

GEPF Rule 14.2.1 stated that if a member had at least ten years’ pensionable service, that member would be paid both a gratuity and also a monthly annuity. Rule 14.1.1 provided that if a member had less than ten years service, that person would be paid a gratuity pension benefit only, which was calculated in a different way to reach a larger lump sum, but no monthly annuity would then be paid. However, under Rule 10.4 a member could apply to the board of the GEPF to purchase additional service that could then be recognised as pensionable service. However, that application had to be made prior to a person exiting the GEPF. Ms van Rheede had applied to do this only after she had already left the GEPF, and GEPF had confirmed that no prior application had been received from her while she was still a paying member of the Fund.

Public Service Bargaining Council (PSBC) Resolution 1 of 2006 governed entitlement to a medical subsidy. A government employee qualified for a medical aid subsidy if he or she had fifteen years of actual service, or ten years of actual service (in the case of ill health). The Government Pension Administration Agency (GPAA) had been engaging with Ms Van Rheede and her application for medical subsidy was finalised in the previous week, with the GPAA determining that she was entitled to a lump sum or a subsidy. She had agreed to a subsidy of 66.67%, which would be paid to Ms Van Rheede’s medical scheme as soon as a valid claim was received from the medical scheme.

Ms Bednar-Giyose said that if Ms Van Rheede managed now to purchase additional service, then she would have to repay the gratuity that she had received in August 2010, or a portion of it, but then additional amounts would be paid by her and her former employer to the GEPF.

Ms Bednar-Giyose stressed that the Committee should consider the financial implications not only of Ms Van Rheede’s own application, but the possible implications should a precedent be set for applications from other people.

Ms Van Rheede was paid a lump sum gratuity of R194 997 on her exit from the GEPF. If she had purchased the extra three months of service prior to her exit from the GEPF, she would have received a gratuity of R52 958 and a monthly annuity of R1 224. If she retired with more than ten years service she would have received, up to 31 July 2011, a total amount of R63 974 (by way of gratuity and arrear annuities). If Ms Van Rheede was allowed to purchase the three month’s of service she would therefore have to repay R131 022 to the GEPF, and it was not known whether she was currently able to do so. If the Committee were to allow the petition and the purchase of that service, the employer and GEPF should not be asked to cover that amount, since she would then have received a substantial amount to which she was not entitled by comparison with other pensioners who had contributed and retired with ten years service.

Ms Bednar-Giyose highlighted that there were potentially many more former members of the GEPF who might be in a similar position to the petitioner, who would then want similar benefits. She added that it was not possible to amend the Rules of the GEPF to cater for the petitioner’s own request. In any event, it was also undesirable, from both a Constitutional and practical perspective, for Parliament to pass special legislation to deal with the one individual, particularly where this might create a costly precedent.

Ms Bednar-Giyose noted that section 36 of the Constitution dealt with the limitation of rights. This stated that  rights may only be limited by a law of general application, and in effect meant that no law should be enacted that would specifically limit the rights of only one individual or a few individuals, nor that would confer benefit on one individual whereas others in a similar position may not benefit. She therefore urged that this petition must not be considered only in light of its own facts. It was important that the Rules of the GEPF be applied consistently, so that some individuals ended up receiving preferential treatment to other similar cases. She asked that the Committee adopt an implementable decision that would address the problem in a consistent manner, based on sound policy, rather than dealing with it on an ad hoc basis that might create disparities.

Government Pension Administration Agency briefing
Mr Kith Moloi, Assistant Manager, Government Pension Administration Agency, said that his briefing would focus on the rules by which pension benefits were paid out. He confirmed that Ms Van Rheede was employed at the DoJ&CD and retired, aged 65, on 30 June 2010, after nine years and nine months of pensionable service. He confirmed that Rule 14.3 provided that if a member retired with under ten years’ service, that member would be entitled to a gratuity equal to the member’s actuarial interest, whereas the gratuity paid to those members with more than ten years’ service was less, but they would be entitled in addition to a monthly pension until date of death. He also confirmed that although it was possible for a member of the GEPF to purchase additional service, this must be done before retirement. In order to qualify for a post-retirement medical subsidy, a State employee must normally have fifteen years actual service on retirement, although this was reduced to ten years’ actual service when the retirement took place for medical reasons. As far as the medical subsidy was concerned, Ms van Rheede did not qualify, since she did not have fifteen years of actual service. He reiterated that Ms van Rheede had not purchased the extra months of service prior to exiting the GEPF. He then reiterated the figures for the gratuity that had earlier been given by National Treasury.

Department of Justice and Constitutional Development briefing
Mr Super Mashele, Senior Manager: Human Resources, DoJ&CD, presented similar information as the previous two speakers. He also set out that Ms Van Rheede was appointed as an Administrative Clerk in the department in October 2000, and was stationed in Wakkerstroom. She reached the compulsory retirement age of 65 on 24 June 2010. Her duly completed retirement documents were submitted through the Office Manager to the Human Resources Directorate in the Regional Office. A letter confirming her retirement benefits was issued to her. Termination of service was effective 30 June 2010. Pension documents were forwarded to National Treasury for implementation. Ms Van Rheede had nine years and nine months pensionable service.

Discussion
Ms J Sosibo (ANC) asked Mr Mashele whether the GEPF Rules were fully explained to Ms Van Rheede before her retirement date, and asked who should have been responsible to explain to her the implications of her being three months short of the ten year benefit when she retired.

Mr Mashele responded that the Department, on a quarterly basis, notified staff members and their managers of their impending retirement at age 65, but did not necessarily go into the details.

Mr Moloi added that the Client Liaison Officers at the regional offices of GPAA throughout the country liaised with the HR officers of all government employees. HR officers within government departments were also furnished with detailed information relating to retirement or exit processes, which may differ from one employee to another. He stressed that the department’s role was to inform all government employers and they should all be aware of the information relating to purchase of service.

The Chairperson asked whether that was to be regarded as confirmation that, in the case of Ms Van Rheede, the Human Resources unit of the Department of Justice had been notified.

Mr Moloi said that the GPAA did not wait for withdrawal forms, but would give prior information of all the benefits, the rules that applied, and related implications for pension members.

The Chairperson asked whether, in the specific case of Ms Van Rheede, the Department of Justice was notified about the implications of possible purchase of the three months service.

Mr Moloi explained the process and said both employer and employee were well aware of the different types of payments.

The Chairperson asked Mr Mashele whether Ms Van Rheede had been notified specifically about the implications of the purchase of three months’ service.

Mr Mashele said the Department would inform employees of when they would reach the compulsory retirement age, and in this case, in February, the employer would have started the process of getting the employee to complete the necessary forms.

The Chairperson stressed that the Committee needed to know whether Ms van Rheede was specifically notified that she was three months short of the ten years that would have given her the right to a gratuity and pension.

Mr Mashele responded that the implications of her nine years nine months was not communicated.

Ms M Mdaka (ANC) asked Mr Moloi whether, after receiving the forms, there was any investigation done as to whether all information had been given by the HR unit.

Mr Moloi reiterated that at the stage when withdrawal forms were received, the GPAA had a mandate to process payment. Prior to that, information was given by the GPAA to skilled HR officers of each government employer. This would have included the types of benefits payable on the different types of exits, and this was provided to each HR unit to ensure that all employees could access that information. A call centre was also available, where members could enquire about the different types of benefits. He reiterated that once the forms were received by GPAA, this entity did not have an obligation to liaise with the member again, because all documentation would have been submitted through the employer’s HR unit. The only case where there would be communication would be where documentation was incomplete.

Ms F Khumalo (ANC) was concerned that Ms Van Rheede might not have been properly informed. She noted Ms Bednar-Giyose’s point that application could not be made after exiting employment. If Ms Van Rheede had been properly informed that would have been clear to her.

Ms Khumalo asked for clarification on the R131 022 that Ms Van Rheede would owe the GEPF, if her application was approved.

Ms Bednar-Giyose explained that if the Committee approved her petition to allow her to purchase the additional three months service, she would be limited to receiving a smaller gratuity, and would therefore have to pay back R131 022 of the R194 000 that she had received last year.

Mr Moloi stressed that Rule 10.4 was intended to allow members to purchase service while they were still in employment, as that would allow them to determine the amount they would have to pay to purchase the extra months to bring them up to ten years of service, and enable the employer to deduct that in monthly instalments from the member’s salary until retirement. Ms Van Rheede would no doubt find it burdensome to pay back a lump sum of R131 022, and also pay in an extra three months’ pension now, to put her into the position she would have been had the three months been purchased while she was still working.

The Chairperson was still concerned as to who bore the responsibility of informing Ms van Rheede of the legal options. The Committee had to decide if Ms van Rheede had been fairly treated, and, if not, then the Department should correct that position, and the person who perhaps had not carried out due responsibility should be brought to book.

Adv Gary Rhoda, Parliamentary Legal Advisor, drew the attention of the Committee to the affidavit from Ms Van Rheede’s Office Manager. This stated that she had been approached in January 2010 with a query about the pension money payable, in view of her impending retirement. The Office Manager had called the Regional Office HR, and received a response that, according to those records, she was already listed as a pensioner. The HR Office also apparently said that because Ms van Rheede had served “ten years” in the Department, she would receive a lump sum gratuity plus a monthly amount. On asking whether she would get paid monthly, the response was that she would indeed receive a monthly amount. The Office Manager further said that there was further intensive discussion, and the documents were then forwarded to her and handed to Ms van Rheede for completion, after which they were sent to the Regional HR Office for processing.

Adv Rhoda felt that this affidavit would answer some questions. However, there was a consideration of whether Ms van Rheede would be able to repay the R131 022 plus extra three months’ contribution, were the Committee to approve the petition.

Ms J Sosibo (ANC) thought that the Committee needed to question Ms van Rheede, and request another meeting with the Department again if it needed to.

The Chairperson concluded that the main issue seemed to be one of communication. It was clear that GEPF and the HR Unit had communicated, but the question was whether Ms van Rheede was properly informed of the particular provisions about the option to purchase three months’ service, to enable her to take a well-informed decision.

Other business
The Chairperson announced that Dr Barbara Loots was leaving her position as Committee Secretary, and wished her well in her new position. He welcomed Ms Ayanda Boss, the new Committee Secretary.

The Chairperson confirmed that a follow up letter had been received from the Institute for Democracy South Africa, in regard to the petition of Mr Greyling, and this had been circulated.

The meeting was adjourned.