UNEMPLOYMENT INSURANCE FUND

1
UNEMPLOYMENT INSURANCE FUND

• BRIEFING FOR PORTFOLIO COMMITTEE
• CAPE-TOWN 1ST JUNE 2004

2
UNEMPLOYMENT INSURANCE FUND

• This new act is a product of an extensive
  research and an inclusive consultative process
  dating as far back as 1994.
• Stakeholders who participated were drawn from the
  academia, labour, business, ILO, the public and
  other government departments.

3
PROCESSES INFORMING THE ACT

• Minister of Labours Five Year Plan 1995
• Labour Market Commission Report
• Stakeholders Forum of 1996
• Report of the Ministerial Task -Team
• DoLs Position Paper
• Second Stakeholders Forum 1998
• Public Representations
• Minister of Labours 15 Point Plan 1999

4
PROCESSESS INFORMING THE ACT CONT

• Detailed input from ILO.
• Detailed input from National Treasury.

5
OBJECT OF RESTRUCTURING THE FUND

• To develop a new policy on Unemployment Insurance
  Coverage and the design of an institutional
  framework, to deal with both the administrative
  and legislative short-comings of the fund.

6
KEY ASPECTS OF THE NEW LEGISLATION

• Coverage
• Compliance and Enforcement Measures
• Discrimination
• Entitlement to Benefits
• Benefit regime
• Actuarial inputs

7
KEY ASPECTS OF THE NEW LEGISLATION

• Employer-employee Database

8
COVERAGE

• Learnerships
• Public Servants
• Company Directors Members of a CC
• Migrant Workers

9
COMPLIANCE AND ENFORCEMENT

• Compliance Orders
• SARS
• Interest and penalties
• Suspension of a contributor.

10
ENTITLEMENT TO BENEFITS

• Ordinary Unemployment benefits
• Illness benefits
• Maternity benefits
• Adoption benefits
• Dependents benefits

11
AFFORDABLE BENEFIT REGIME

• Sliding scale
• Top up

12
ACTUARIAL EVALUATION

• Actuarial inputs
• Actuarial database
• Annual actuarial evaluations

13
EMPLOYER-EMPLOYEE DATABASE

• Duty of the COMMISSIONER.
• Maintain databse of Information to be supplied by
  employers
• Feedback to employers

14
CONTRIBUTOR DATA EXTRACT
15
CONTRIBUTOR SALARY DISTRIBUTION
16
INCOME AND EXPENDITURE
YEAR BENEFITS MIL. BENEFIC. (000) INCOME ADMIN EXP (000) EMPLOYERS
1997 2685 870 2696 183 275400
1998 3051 842 2569 197 280470
1999 2984 769 2756 239 283200
2000 2905 674 2791 338 270440
2001 2838 637 3694 618 275435
17
FINANCIAL POSITION OF FUND
18
PERIOD TAKEN TO APPROVE CLAIM PER REGION
19
PERIOD TAKEN TO APPROVE CLAIM PER SECTION
20
CHANGES IN CLAIM PATTERNS

• Number of claims increased significantly from
  August 2003 onwards.
• Claim patterns appear to be changing
• Period taken to apply - average increased from
  45 to 75 days
• Period to approve claim average increased from
  30 to 37 days
• Expect more IBNR claims to emerge in the future
  due to the additional delay
• Major reason for the increase in outstanding
  claims reserves

21
Claimants by termination reason and sex