PSC releases the Report on the Assessment of the management of service terminations and pension pay-outs in the Public Service

06 July 2016

1. BACKGROUND
   The Public Service Commission (PSC) has conducted a study on the assessment of the management of service terminations and pension pay-outs in the Public Service. The study was conducted as a result of the numerous complaints that the PSC received from retirees and beneficiaries of deceased pensioners regarding delays in the processing of pension pay-outs and other related benefits by employer departments and the Government Pension Administration Agency (GPAA). Other complaints were reported in the media. The complaints were mostly centred around non-adherence to timeframes set for pension pay-outs after the submission of all necessary documentation.
   
   According to the Government Employees Pension Law, 21 of 1996, as amended, the pension pay-out should be transferred to the person concerned within 60 days after the submission of all necessary documentation. The PSC’s involvement in resolving some of the complaints revealed that in some instances, delays in pension pay-outs dragged for periods ranging between one and ten years, thus resulting in adverse effects on the welfare and livelihood of public service retirees and their dependants, and beneficiaries of deceased employees.
   
   Given the critical role of pension pay-outs on the livelihood of retirees and their dependants and beneficiaries of deceased employees, it is important and expected of government departments and GPAA to ensure that they comply with timeframes stipulated in the policy framework when dealing with service termination and pension pay-outs.
    

2. KEY FINDINGS OF THE STUDY
   The key findings from the study revealed the following:

   • Service termination policies and procedures are in place in most departments.

   • Inadequate record management within departments results in delays in the processing and finalisation of pension pay-outs.

   • Customary and civil marriage disputes is a challenge because the GPAA does not pay-out pension if there are contested issues.

   • There is a lack of awareness of the service termination and pension pay-out processes which lead to applications not being completed correctly.

   • Centralised HR functions especially in big national departments with provincial and regional offices result in delays in the submission of pension documents. The capacitation of HR practitioners in those areas with decentralised functions needs attention.

   • Employees do not update their pension beneficiary information with the employer and this contribute greatly to delays in pension pay-out in the event of death.

   • The non-readiness of departments in terms of their IT computer capacities to switch to the new E-channel system and unavailability of scanners for some departments caused some delays in the submission of pension pay-out application forms.

   • Many retirees do not get progress updates from departments and GPAA about their pension pay-out. In most instances, the feedback is only provided after the retirees have enquired.

   • Some of the departments experience problems with the GPAA customer care line which is not always user-friendly.
     
     The PSC has dealt with ad hoc pension pay-out complaints dating back from the time of integration of the different pension funds i.e. Transkei, Bophuthatswana, Venda and Ciskei (TBVC) and other pensions up to recent years. In dealing with the ad hoc complaints on pension pay-outs, the PSC has observed the adverse effects on pensioners/retirees and their dependants or beneficiaries which could be attributed to the delays. Some of the pensioners’ medical aids were cancelled by medical aid service providers due to non-payment of monthly contributions after the member has exited the public service. Some of the pensioners could not feed their families, some could not continue to take their children through school or higher learning institutions and some lost their properties due to lack of money to service their debts. These experiences are traumatic for pensioners and their beneficiaries.
     
     The study also revealed that most government departments (National and Provincial) do not have a service termination plans for the retirees, which means that there is no programme in place to prepare the retirees for life as pensioners. Furthermore, departments focus mainly on “paper processing” and little consideration is paid to the psycho-emotional aspect of the retirees. The study revealed two outstanding departments that have service-termination programmes and are mastering the supportive role to their retirees, that is, the National School of Governance (NSG) and the Department of Defence. Each of these two departments has a clear retirement plan and/or programme, which is catered for within their HRM plan.
      

3. RECOMMENDATIONS
   The PSC makes the following recommendations which are informed by the findings of the study. The different stakeholders are expected to implement these recommendations to address issues causing delays and challenges in the service termination and pension pay-out processes.

   • GPAA should produce a database of unclaimed pension benefits by dependents or beneficiaries especially the old years, employ a tracing agent to find the dependants or beneficiaries and process their claims.

   • Departments should submit details of pension members who have not claimed their pension to GPAA to add to the work of the tracing agent.

   • A structured, planned and compulsory training on all HR processes, especially the service termination and pension pay-out processes must be provided by departments independently or through the NSG and Department of Public Service and Administration (DPSA).

   • Departments should, in collaboration with GPAA and South African Revenue Service (SARS), implement awareness campaigns continuously for the benefit of newly appointed employees and long-term serving employees to ensure a thorough understanding of the processes, income tax issues and legislative changes. Where possible, dependants and/or beneficiaries should be invited to the information sessions with consent of pension members.

   • Big national departments that have provincial and regional offices across the country should decentralise some HR functions, especially processes related to service termination and pension pay-outs.

   • Departments should also set aside financial resources to upgrade departmental IT systems to enable them to be compatible with the GPAA e-Channel system.

   • Departments and GPAA must put in place a strategy to communicate with, and provide feedback and support to retirees, dependants and beneficiaries of deceased employees until finalisation of the pension pay-out process.
      

4. CONCLUSION
   There are challenges in some departments that lead to delays in the processing of service termination and pension pay-outs even though they are not in big scale. However, the impact of those challenges is huge and severe to the retirees, their dependants and/or beneficiaries, especially the beneficiaries of deceased pension members. The PSC is of the view that the Report on the Assessment of the management of service terminations and pension pay-outs in the Public Service will serve as a base in finding lasting solutions to the challenges experienced in service termination and pension pay-out in the Public Service.

Issued by the Public Service Commission

For enquiries, please contact: Mr Ricardo Mahlakanya; Tel: 012- 352 1070; Cell: 079 769 7955; Email: ricardom@opsc.gov.za; or Mr Humphrey Ramafoko; Tel: 012- 352 1196; Cell: 082 782 1730; Email: humphreyr@opsc.gov.za.
 

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