South African Post Office SOC Limited Amendment Bill Departmental briefing & adoption

Meeting report

SA Post Office SOC Limited Amendment Bill [B24B-2013] Department of Communications briefing
Mr Willie Vukela, Chief Director: ICT Postal Policy, Department of Communications, set out a synopsis of his presentation, and noted that he would brief Members firstly on the background to the Bill and what it sought to achieve, and would take Members after that through the clauses of the Bill.

He noted that the Post Office Pension Fund was established on 1 October 1991, in terms of section 9 of the Post and Telecommunications-related Matters Act (PTMA) of 1958. This Fund was subsequently renamed as the Post Office Retirement Fund (PORF) in 2005. This Fund was a juristic person managed by a Board of Trustees, as a separate legal entity from the SA Post Office.

He told Members that a landmark pension fund case involving the PORF had been decided on in March 2013. Ms Ngewu applied to the Constitutional Court for relief that would allow her to obtain immediate payment of her share of the pension interest benefit from her former spouse’s pension fund, which was awarded to her following their divorce. The PTMA of 1958 had not made provision for the so-called “clean break” principle, decided upon a few years ago, which recognised that spouses should be able to access their share of the pension benefit, immediately on divorce or dissolution of a customary marriage. The Constitutional Court found the PTMA to be inconsistent with section 9(1) of the Constitution, and thus invalid, because it did not provide for this, having been set up prior to the “clean break” decision and the Constitution. The Constitutional Court, however, suspended the order of invalidity for eight months from the date of the order (07 March 2013) so that the Minister of Communications could remedy that constitutional defect by 07 November 2013.

Having described that background, Mr Vukela turned to the Preamble of the Bill, which was to amend the SA Post Office SOC Ltd Act, to improve governance provisions and the relationship between the Boards of the SA Post Office SOC Ltd and the SA Postbank Limited, and to amend the 1958 PTMA to ensure it complied with the spirit of the Constitution today and to provide for payment of pension benefits to a former spouse of a member on divorce or the dissolution of a customary marriage.

The Bill was divided into six clauses. Clause 1 sought to substitute the definition of “Post Office Act” for “Post and Telecommunications-related Matters Act” due to the name change. Clause 2 sought to amend section 3 of the SA Post Office Act by substituting “Post Office Act” for “Post and Telecommunication-related Matters Act”.

Clause 3 sought to amend section 8(2)(a) of the SA Post Office Act, by removing the requirement that the Managing Director (MD) of the Postbank be one of the members of the Post Office Board by virtue of his or her office. This clause further sought to amend section 8(5) of the Act, by removing the requirement that when the Board recommended persons for appointment to the Board of the Postbank, they must nominate non executive members of the Board of the Post Office. The amendment was required since the appointment criteria and description of members was different, respectively, for the SA Post Office and Postbank. Clause 3 further sought to amend section 8(6) of the same Act by making it clear that if any non-executive members of the Post Office Board were appointed to the Board of the Postbank, such members were, when performing these functions, accountable to the Board of the Postbank, in line King III, Chapter 2, paragraph 142: “the holding company must recognise the fiduciary duties of the subsidiary company’s directors and particularly their duty to act in the best interest of the subsidiary company at all times whether or not the director is nominated to the board of the subsidiary company by the holding company”.

Clause 4 sought to amend section 11(4)(c) of the SA Post Office Act, to ensure that all members of the Board must be fit and proper persons to manage the affairs of the Post Office in its capacity of a controlling company of the Bank, as contemplated in section 44 of the Banks Act.

Clause 5 of the Bill, read with the Schedule, provided for the amendment of the PTMA of 1958. Mr Vukela reiterated that the PORF was a juristic person, that must act in accordance with the pension-related provisions of the PTMA. It was managed and controlled in accordance with pension statutes or rules made under section 10 of the PTMA. As he had already stated, the current rules of the PORF did not allow a 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 a customary marriage, soon after the divorce order or the order for the dissolution of a customary marriage was granted. Instead, the former spouse would only, in terms of these rules, only be entitled to receive a portion of the member’s interest after the exit of the member from the PORF, which the Court found unconstitutional as it contradicted the “clean break” principle.

Although the Constitutional Court had given the Minister time to correct the position, the rules of the PORF could not be amended, until the PTMA was also amended, because section 10B(1) of the PTMA stated that: “No pension or lump sum from a pension fund referred to in section 10, or right to such a benefit, or right in respect of contributions made by, or on behalf of, a member, may be ceded, pledged or hypothecated, or to be attached or subjected to any form of execution under a judgement or order of a court of law…”. Clause 5 of the Bill now sought to correct this prohibition in order to provide for the implementation of the “clean-break” principle, in terms of which a former spouse would not have to wait until the pension member had exited the fund, but could claim his or her portion immediately on divorce or dissolution of a marriage. Therefore, clause 5 was now inserting a new section 10F into the PTMA to give effect to the “clean-break” principle and section 10B of the PTMA was amended to enable the PORF to amend its rules accordingly.

Clause 6 provided for the amendments of the law mentioned in Schedule 1 of the Act, while clause 7 contained the short title: the South African Post Office SOC Ltd Amendment Act, 2013.

Mr Vukela turned to the departments and other stakeholders consulted in the legal process. These had included those cited by the Court as respondents, which included the Department of Justice and Constitutional Development, Department of Finance, SA Post Office, Post Office Retirement Fund, Telkom SA and civil and organised society by gazetting the Bill for public comments.

The government process included the Bill being developed in consultation with the SA Post Office SOC Ltd, Department of Finance (National Treasury), and PORF. It was further approved by the economic sectors and employment cluster on 17 April 2013, by a Cabinet committee on 18 June 2013 and full Cabinet on 26 June 2013.

Employment Services Amendment Bill
The Committee had adopted the Employment Services Amendment Bill on the previous day, subject to two amendments. In order to now authorise the new version of the Bill for printing, Members checked that the wording was in line with what the Committee had wanted.

These two amendments were in clause 35(9), where the words “or appoint a new Chief Executive Officer” were to be inserted at the end of the clause, and clause 45 where the phrase “or until the Minister appoints a new Chief Executive Officer” was to be inserted at the end of the clause. Members were satisfied that the version now presented reflected their decision. They moved for, seconded and adopted the wording.

Discussion
The Chairperson felt the Bill was long overdue. She hoped that Parliament would soon be able to look at all the Bills that were still around from a pre-democratic era, to try to change them for the betterment of democracy.

The Deputy Director General, Department of Communications, noted that this was really a question of alignment and ensuring that rights were afforded in terms of the Constitution. The Department had done everything possible to ensure that the order of the Constitutional Court was duly effected in this Bill, and was very confident that the Bill responded to the expectations of the Constitutional Court.

Mr Groenewald questioned if the Reserve Bank was included in the departments and stakeholders consulted.

Mr Vukela responded that the Bill had a direct effect on the Minister of Finance, which represented the Reserve Bank as the regulator, as the Court wanted a Minister involved. The Department also worked closely with officials from the Reserve Bank and the regulator.

Mr Jacobs noted the Bill was supposed to be in operation by 7 November 2013, and asked what had happened in the meantime, and whether the Bill would be able to operate retrospectively to that date.

Mr Alf Wiltz, Director: Legal Services, Department of Communications, said that the question of how exactly to amend the legislation had required a serious consideration and discussions between the lawyers of the Department of Communications, the State Law Advisers and Parliamentary Legal Advisers, to determine exactly what the net effect was and the implications of the Bill. In principle, due to the constitutional provisions around the separation of powers, the judiciary would ordinarily not want to interfere in the sphere of government, especially not the legislature, and this was why the Constitutional Court did not amend the law itself, but opted to give the state and legislature some time to give effect to these amendments, with a “worst case scenario” of an eight month deadline. He saw this as a temporary measure because the legislature must perform the important function. This meant that, with effect from 7 November until the legislation was passed, section 10(e) of the 1958 PTMA would be invalid to the extent that it was inconsistent with the “clean break” principle. This created uncertainty, because the Court did not stipulate what precisely had to be amended, but it was now up to the legislature to create certainty. However, the Court also said that a new section 10F would be read into the 1958 Act, as from 7 November, if the Act had not been amended by then. This meant that, currently, Ms Ngewu and other former spouses had the right to these benefits, and the Bill was trying to ensure that they were legislated for in this Bill. The PORF was already gearing itself up to pay all previous divorce orders and any new divorce orders, the process had been set into motion, so to speak. If any person picked up the 1958 version of the Act and tried to read into it what the Court had said, it would be impossible, because there was no written amendment yet. However, this Bill would be creating legal certainty by writing the Court’s decision into an amending section. For this reason, it was necessary to proceed with this Bill and have it promulgated as soon as possible, to correct the law and for the sake of legal certainty.

On the issue of retrospectivity, Mr Wiltz noted that whilst this Bill provided for all future spouses, there was still a gap in dealing with all previous spouses, and this could date back to 1991. The Department had been advised by the PORF that there were somewhere between 500 and 600 outstanding divorce orders which had not been paid and accessed. What would happen, once the law came into effect, was that everyone would be brought into the loop, and all those who were entitled to an immediate payout, would be paid. This would be done in terms of the amended section 10F(j), which read: “Any portion of a member’s pension interest assigned to a former spouse in terms of a decree of divorce or a decree for the dissolution of a customary marriage granted prior to the enactment of this subsection must, for purposes of any law other than the Income Tax Act, 1962 (Act No. 58 of 1962), including, but not limited to, (a) of the Divorce Act. 1979 (Act No. 70 of 1979), de deemed to have accrued to the member on the date of enactment of this subsection, and must be paid or transferred in accordance with (a) to (i)”. The net effect was that this applied retrospectively.

Mr Jacobs asked how the numbers of people making claims could be limited.

Mr Wiltz explained that the pension payouts would only be made in terms of a court order, which was the enabling document.

The Chairperson asked how the Department would make the public aware of the processes to follow, so that people understood what to do and where to go, as there were probably many other people in the same situation as Ms Ngewu out there in the most rural areas. She asked if the Post Office representatives had anything to say. 

Mr M Fassen, General Manager, SA Post Office, said the PORF welcomed the amendments in the Bill as the Fund simply needed the enabling legislation to give effect to the payments. The PORF was geared up to implement these measures as soon as they could.

Mr Vukela assured Members that the PORF was highly organised and the officials who managed the Fund knew everyone in the system, so they were just waiting for the Bill to become operational to kick-start the process of implementation. Representatives and unions were also involved in the process and as soon as the Bill was passed by the legislature, it would be implemented in regard to the valid claims. He agreed that there were probably many people in a similar situation to Ms Ngewu who did not know their rights, especially given that this law was 55 years old.

Clause by clause consideration of the South African Post Office SOC LTD Amendment Bill: and adoption
The Chairperson moved onto the clause by clause considerations

Members agreed to the long title, clause 1 to 5, the short title, schedule and memorandum of objects. 

Members agreed unanimously to pass the Bill.

Adoption of Committee report
The Chairperson then proceeded to read through the Report of the Select Committee on Labour and Public Enterprises, which reflected that the Bill had been adopted. Members were happy with, and duly adopted the Report.

The meeting was adjourned.