1 Briefing to the Portfolio Committee on Defence on the Mobility/Exit Mechanism for Members of the SA National Defence Force and the Employee Initiated Severance Package for Public Service Act Personnel Prepared by the Chief of Human Resources, DOD 11 Jun 07
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1 Briefing to the Portfolio Committee on Defence on the Mobility/Exit Mechanism for Members of the SA National Defence Force and the Employee Initiated.
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Briefing to the Portfolio Committee on Defence on the Mobility/Exit Mechanism for Members of the SA National Defence Force and the Employee Initiated Severance Package for Public Service Act Personnel
Prepared by the Chief of Human Resources, DOD11 Jun 07
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Aim
To brief the Portfolio Committee on Defence on the implementation of the Mobility/Exit Mechanism (MEM) for members of the SA National Defence Force and the Employee Initiated Severance Package (EISP) for Public Service Act Personnel (PSAP)
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Scope
Exit Mechanisms Implementation of the MEM for SANDF
members and EISP for PSAP Analysis of the Impact of Implementation of
the MEM and EISP Conclusion
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Exit Mechanisms: MEM
Legal basis GEPF Rule 14.8 and 20 amended Approved by National Treasury Minister of Defence approved 5 Jul 05 (ito Section 55 of
Defence Act [42 of 2002]) Intent of MEM
Should lead to a tangible rightsizing progress Execute through realistic succession planning Guard against the exodus of expertise/scarce skills Advise members iro career progress as informed by the
Transformation and Restructuring imperatives Choice to accept/reject offer – MEM is voluntary
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Exit Mechanisms: MEM (cont)
Guidelines for Succession Planning iro MEM Are functional groups/musterings constrained by
critical shortages Status of ETD and learner throughput Maintenance of expertise Contribution to rightsizing (MTEF & longer) Contribution to race-rank distribution correction “Old” Service System contract expiries and
renewal justified Succession planning:
•Role of Services and Divisions
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Exit Mechanisms: EISP
Minister of PSA determination introduced the EISP wef 1 Jan 06 Ito Section 3(3)(c), Public Service Act, 1994
DOD introduced the EISP wef 31 May 06 EISP Benefits Structure
Pension beenfits ito the Gov Employees Pension Law, 1996
Departmental benefits ito the Implementation Measures EISP Application
Employees initiate their separation via the EISP EISP Status
DOD expects possible 200 applications for the total MTEF period
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MEM FOR SANDF MEMBERS: BENEFIT STRUCTURE
Less than 10 years service and/or younger than 55 years of age
Less than 10 years service and/or younger than 55 years of age
10 years pensionable service and 55 years or older
10 years pensionable service and 55 years or older
GRATUITY & ANNUITY
- NO SCALING DOWN OF PENSION BENEFIT RULE 14.3.3(b)
- WITHOUT AN ADDITION OF PENSIONABLE SERVICE RULE 14.2.4(b)
GRATUITY & ANNUITY
- NO SCALING DOWN OF PENSION BENEFIT RULE 14.3.3(b)
- WITHOUT AN ADDITION OF PENSIONABLE SERVICE RULE 14.2.4(b)
ACTUARIAL INTEREST RULE
14.4.2
ACTUARIAL INTEREST RULE
14.4.2
STATE GUARANTEE: Third party debts recovered from exit pay
CONTRACTUAL OBLIGATIONS: Released
PRO-RATA SERVICE BONUS
LEAVE: Payment of leave credit
RESETTLEMENT: Actual expenses
MEDICAL PROVISION: Plus 10 years service, option to buy into RFMCF up to age 60, and eligible for medical service according to SAHMS provisions
EXIT PAY: 2 weeks for every full year service, but a minimum of R 15 000.00 payable
OFFICIAL HOUSING: One month’s notice
SUBSIDISED MOTOR VEHICLE SCHEMES
RESKILLING: Maximum of R13 000.00 for reskilling, training for employment opportunities, and entrepreneurial skills
MEMMEM
Pension Benefits ito GEPFPension Benefits ito GEPF
Departmental BenefitsDepartmental Benefits
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EISP FOR PSAP EMPLOYEES: BENEFIT STRUCTURE
Less than 10 years service and/or younger than 55 years of age
Less than 10 years service and/or younger than 55 years of age
10 years pensionable service and 55 years or older
10 years pensionable service and 55 years or older
GRATUITY & ANNUITY
- NO SCALING DOWN OF PENSION BENEFIT RULE 14.3.3(b)
- WITHOUT AN ADDITION OF PENSIONABLE SERVICE RULE 14.2.4(b)
GRATUITY & ANNUITY
- NO SCALING DOWN OF PENSION BENEFIT RULE 14.3.3(b)
- WITHOUT AN ADDITION OF PENSIONABLE SERVICE RULE 14.2.4(b)
ACTUARIAL INTEREST RULE
14.4.2
EISPEISP
Pension Benefits ito GEPFPension Benefits ito GEPF
Departmental BenefitsDepartmental Benefits
MEDICAL: 55 yrs & older qualify for post-retirement medical assistance:
Less 10 yrs equal 12 times employer contribution
10 to 15 yrs equal to 36 times employer contribution
15 yrs plus 2/3rd employer contribution per month
STATE GUARANTEE: Third party debts recovered from exit pay
CONTRACTUAL OBLIGATIONS: Released
LEAVE: Payment of leave creditRESETTLEMENT: Actual expenses, 55 yrs & older compensated according to PSCBC Resolution 3 of 99 & Departmental Policies
EXIT PAY: 2 weeks for every full year service, but a minimum of R 15 000.00 payable
OFFICIAL HOUSING: One month notice
SUBSIDISED MOTOR VEHICLE SCHEMES
RESKILLING: Maximum of R13 000.00 for reskilling, training for employment opportunities, and entrepreneurial skills
PRO-RATA SERVICE BONUS
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MEM AND EISP as at 31 May 2007: Approved by Minister of Defence
Race and Gender
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EISP as at 31 May 2007: Approved by Minister of Defence
Race and Gender
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MEM AND EISP as at 31 May 2007: Approved by Minister of Defence (cont)
Age Group
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MEM AND EISP as at 31 May 2007: Approved by Minister of Defence (cont)
Age Group
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MEM AND EISP as at 31 May 2007: Approved by Minister of Defence (cont)
Fin year and Budget Holder
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Termination Type 2005/06FY 2006/07FY
Contract Expired 500 1 023
Deceased 864 780
Departmental Transfer 281 830
Discharged 319 194
Medical Discharged 104 142
Resigned 1 319 1 104
Retired 350 312
Total 3 737 4 385
EXIT PER REASON OTHER THAN EXIT MECHANISM
Note: FY 2005/06: MEM/EISP = 12,8% of total exits FY 2006/07: MEM/EISP = 18,7% of total exits
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Conclusion Steady results are being achieved on stated
objectives eg representivity and age profiles with the implementation of the MEM 42% of all exits are middle-management (Col, Lt Col,
WO1, WO2) 30,2% of all exits are White middle-management
males 85,7% of all exits are White
Difficult to forecast the exact rightsizing results as MEM/EISP are voluntary
The tempo of implementation for both the MEM and EISP determines their success in the DOD
Continuous (monthly) monitoring of progress Continued emphasis on succession planning
efforts ito the MEM application
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DISCUSSION/QUESTIONS
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Exit Mechanisms: MEM
Overview 1994 to 2005 Downsizing/rightsizing origins
• Interim Constitution (Act 200 of 1993) Section 236(c) • Constitution (Act 108 of 1996) Section 24(1) of Schedule 6
and Provisions of the Interim Constitution continues in force, Sections 236(1),(2),(3),(6) & (7)(b) & (8), 237(1) and 2(a)
Above provisions were aimed at the size and affordability of the DOD and informed the Defence Review of 1998
• Envisaged compulsory employer-initiated retrenchment • Overtaken by the availability of the Voluntary Severance
Package (VSP) (July 1996) and the Employer Initiated Package (EIP)
• The DOD steadily downsized towards 68 253 Regulars (excluding 8 617 MSDS), mainly via natural attrition
• 67 167 personnel exited from 1 Jan 96 – 31 May 07 (20 902 via the VSP/EIP)