UIF ANNUAL REPORT 2005/06 PRESENTATION TO THE PORTFOLIO COMMITTEE

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• UIF ANNUAL REPORT 2005/06 PRESENTATION TO THE
  PORTFOLIO COMMITTEE
• 3 NOVEMBER 2006

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• Thank you for inviting us to present to you the
  Annual Report and Annual Financial Statements for
  the 2005/06 financial year of the Unemployment
  Insurance Fund

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Index

• Mandate
• Strategic priorities
• Service delivery improvements
• Compliance levels
• Transformation agenda
• Financial report
• Actuary report
• Auditor Generals report
• Management Response
• Work plan Priorities for 2006/07
• Outlook

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Mandate

• The Unemployment Insurance Fund was established
  in terms of Section 4(1) of the Unemployment
  Insurance Act, 2001.
• Funding is provided through the amended
  Unemployment Insurance Contributions Act 2002
  which provides for the imposition and collection
  of contributions for the benefit of the Fund.
• The Fund administers the unemployment insurance
  contributions collected from employers and
  employees to pay benefits and related
  administrative expenses. The surplus is invested
  with Public Investment Corporation.

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UIF STRATEGIC PRIORITIES

• Broaden coverage of beneficiaries
• Improve service delivery
• Strengthen Compliance and enforcement
• Sustain an affordable benefit regime
• Resolve legislative and administrative
  challenges.

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COVERAGE OF BENEFICIARIES 2005/06 Claims up
5, Value up 18.5
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INCREASED NUMBER OF BENEFICIARIES WITHIN THE
SOCIAL SECURITY SAFETY NET number of claims up
5 and total value of claims R2.9bn up 18.5.
R2476m
R2094m
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Strategic Transformation

• Transformation agenda
• Approval of the restructuring plan for Head
  Office and subsequently the provincial offices
  will
• Strengthen strategic management and internal
  control
• Lead to the implementation of a new governance
  structure including risk management
• Ensure a customer orientated service delivery
• Employment Equity Report
• Actual statistics for African females, Asians,
  Coloureds and people with disabilities are in
  close proximity of the target set.
• 67.5 of the black representation consists of 59
  African employees, 2.5 Asian employees and 6
  Coloured employees.
• Over 65 of the workforce are women.

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Employment Equity Race Workforce Profile
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Improved service delivery

• OPERATIONAL ACHIEVEMENTS
• NATIONAL ROLL OUT OF A NEW BENEFIT PROCESSING
  SYSTEM (SIYAYA)
• Over 589,000 claims processed a 5 increase.
• ENHANCEMENT AND FULL INTEGRATION OF ALL BUSINESS
  SYSTEMS (AXSONE)
• Contributing to better control environment,
  financial management information and favourable
  Auditor General report.
• Electronic Fund Transfer
• 100 conversion of benefit claimants to payment
  via bank accounts removing queues at pay points.
• Financial savings of over R20m, disappearance of
  queues at service pay points and reduction in
  fraud.

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Improving compliance

• INCREASED NUMBER OF CONTRIBUTORS
• Over 490 000 commercial employers registered up
  3.3
• Over 650 000 domestic employers registered up
  3.6.
• Commercial Registrations 2004/05 2005/06
• Employers 474,514 490,145 3.3
• Employees 6,252,644 6,502,996 4
• Domestic Registrations
• Employers 628,390 650,850 3.6
• Employees 499,165 501,629 0.1

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Improving compliance

• Revenue up R800m or 12.5 for 2005/06

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SUMMARY FINANCIAL REPORT
R million 2005/06 R million 2004/05 change change
Contributions 6,922 6, 152 12.5
Investment income 896 644 39.1
Other revenue 10 11 9.1
Benefit expenditure 2, 933 2, 476 18.5
Operating costs 580 560 3.6
Net surplus 3,868 2, 043 89.3
Investments 14, 290 9, 758 46.4
Reserves 14, 723 10, 178 44.6
Total Assets 14, 871 10, 462 42.1
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FINANCIAL ACHIEVEMENTS

• FINANCIAL IMPROVEMENT
• Net surplus of R3.9bn up 89 for 2005/06

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BUILDING A SUSTAINABLE BENEFIT REGIME financial
reserves R14.7bn up 44

• LONGER TERM SUSTAINABILITY
• Investment under management with PIC of R14.3bn
  up 46

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Actuarys Report

• The asset evaluation conducted by the Funds
  Actuary concluded the following
• Reserves required to meet potential future
  liability was estimated at R9,4bn as at 31st
  March 2006 as of that date the Fund had R14,9bn
  in reserves (R5,5bn above the required amount).
• The Actuary also concluded the Fund will continue
  to generate significant surpluses on a cash flow
  basis for the next ten years.

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IMPROVING ACOUNTABILITY

• THE AUDITOR GENERALS UNQUALIFIED REPORT IS
  ANOTHER MAJOR ACHIEVEMENT - COMPARED TO PRIOR
  YEAR
• NO AUDIT QUALIFICATIONS
• MAJOR AREAS OF IMPROVEMENT
• Bank reconciliation process
• Benefit payment to contributors
• Fixed asset management
• Computer controls

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Addressing areas of emphasis

• The UIF Management is taking the lead in
  addressing areas raised as matters of emphasis.
• A monitoring matrix has been developed and
  implemented to monitor the progress in
  implementing AG recommendations
• Internal audit resource secured to implement the
  audit plan for the current year.
• System enhancements, policies and procedures are
  under review. Some changes have been approved and
  implemented to address areas of non compliance.
• A recruitment drive is underway to strengthen
  capacity in terms oversight and strategic
  direction.

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Service improvement initiatives for 2006/07

• Ufiling Project to enable non SARS employers
  declare and pay on line via the web launched by
  the Minister.
• Implementation of electronic document management
  system with implementation of document scanning
  and management facilities.
• Enhancement of call centre facilities and
  implementation of CRM strategy through the
  introduction of document tracking and SMS
  facilities.
• Finalise provincial structures for service points
  and decentralise claims processing.

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Work Plan Priorities 2006/07

• Finalise implementation of the corporate
  structure of the Fund.
• Ring fencing of operational activities
• Decentralise UIF Database management.
• Electronic archiving
• Data cleansing
• Capacity improvements
• Compliance with legislation.
• Improve Income for 2005/06 15
• PFMA National Treasury Regulations
• Implementation of formal risk management
  structure and processes for the Fund
• Pay claims within four weeks

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Outlook

• Prospects for the Fund remain positive due to
• Continuous improvement in Finances Reserves
  amount to R16.4bn up 12 compared to year end
  2005/06.
• Continuous improvement of management capacity
  through the ongoing restructuring of the Fund
  through the ring fencing process and recruitment
  drive
• Improved institutional capacity attributable to
  enhanced operational and financial management
  systems.

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Department of LabourUnemployment Insurance Fund

• THANK YOU