INCLUSIVE FLEXIBLE REMUNERATION PACKAGE SYSTEM (DISPENSATION) FOR MEMBERS OF THE SENIOR MANAGEMENT SERVICE(SMS) ON LEVELS 13 TO 15

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INCLUSIVE FLEXIBLE REMUNERATION PACKAGE SYSTEM
(DISPENSATION) FOR MEMBERS OF THE SENIOR
MANAGEMENT SERVICE(SMS) ON LEVELS 13 TO 15
Presenters Name D Van Loggenberg Branch
Regional Office Gauteng
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Introduction

• Commencement of SMS dispensation
• Compensation of new dispensation commenced on
  January 2001.
• Cost-to-employer remuneration system.
• Also referred to as a flexible remuneration
  system.
• The objectives were to implement and maintain a
  modern and flexible remuneration with the view to
  amongst other things to enhance departments
  external equality in relation to the labour
  market in order to recruit and retain SMS members
  with the necessary skills and competencies.

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REMUNERATION SYSTEM

• CURRENT REMUNERATION SYSTEM
• Current system comprises of the following
  elements
• Basic salary (notch)
• Service bonus
• Employers contribution to GEPF
• Employers contribution to registered medical aid
  scheme
• Home Owners Allowance

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Diagram
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• Draft document Total remuneration structures of
  Magistrates
• The total remuneration structure should include
  the following
• - Basic salary component of (60 of total
  package)
• - Pension Benefit
• - Flexible portion
• The rules relating to structuring of the total
  remuneration packages should be similar to those
  in respect of senior management position in the
  public service.

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• Composition of the inclusive flexible
  remuneration package.
• Members who are appointed permanently or on
  contract
• and who are admitted to the Government Pension
  Fund
• (GEPF).
• The inclusive remuneration package consist of the
  basic salary, State contribution to the GEPF and
  a flexible portion
• The basic salary consists 60 of the inclusive
  flexible remuneration package
• The States contribution to the GEPF is
  calculated on the basic salary
• The remaining portion of the remuneration package
  may be structured

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• Flexible portion (1)
• Motor vehicle allowance
• Maximum amount of 25 of total package (subjected
  to SARS maximum reimbursable amounts)
• If structured he/ she is OBLIGED to maintain a
  reliable vehicle, the SMS member must at all
  times have his or her vehicle (or a substitute)
  available for official journeys.
• If not structured, there is no obligation to
  utilize own (private) vehicle for official
  purposes.
• Heads of Department (or delegate) can deviate
  from the above for official purposes, taking into
  account practical implications, cost
  effectiveness, road conditions etc.
• If structured, SMS members must secure own
  finance
• Must maintain comprehensive insurance on the
  vehicle.
• MMS member is responsible for parking fees at the
  place of work

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• Motor vehicle cont.
• As far as possible, an SMS member is obliged to
  provide free transport to official passengers to
  the same destination on an official journey.
• If an SMS member, who structures a motor vehicle
  allowance, utilises private vehicle to carry out
  official duties, he or she shall be compensated
  according to the tariffs payable for privately
  owned vehicles as prescribed by the Department of
  transport and shall reimburse toll fees.
• MMS member is responsible for parking fees at the
  place of work
• Any journey between an SMS member's home and work
  constitutes a private journey.
• Any journey between an SMS member's home and work
  constitutes a private journey.

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• 13th CHEQUE
• The 13th cheque is an annual payment in the
  anniversary month of birth.
• The 13th cheque is payable on the day the SMS
  member is normally paid his or her salary and
  allowances
• If appointed from outside Public Service a pro
  rata amount is paid for the specific period
• Calculated from the 1 day of the anniversary
  month to the last day before the anniversary
  month.
• Specific conditions for payment of 13th cheque is
  stipulated in the policy document for SMS
  members.

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• Medical Assistance
• SMS members who are members of registered medical
  aid schemes are not obliged to structure for an
  employer contribution towards the scheme.
• The Executing authority shall pay the total
  medical aid scheme subscription fee directly on a
  monthly basis (Persal)
• The Minister of Finance has amended the personal
  income tax rates and tax bracket structure with
  effect from 1 March 2008 for the 2009 tax year.
• The Minister of Finance has amended the SARS
  capped amounts as follows. (Amendments to the
  monetary caps for tax free medical scheme
  contributions)

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• Medical Aid (2)

Membership profile With effect from 1 March 2008 tax year
Principal member R 570 pm (R 6 840 pa)
Principal member plus 1st dependant (irrespective the age of the dependant) Additional R 580 pm (R 6 840 pa)
Further dependants (irrespective the age of the dependants) Additional R 345 pm (R 4 140 pa) per dependant.
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• Medical allowance (3)
• The amendments to monetary tax amounts has
  implicit implications for SMS and MMS members who
  have the flexibility to structure for an employer
  contribution towards a registered medical aid
  scheme. This means that of a SMS or MMS member,
  who is a member of a registered medical scheme,
  decides not to structure for an employer
  contribution, he / she is still eligible for the
  tax benefit based on the membership profile
  therefore the difference between zero and the
  appropriate SARS capped amount is deducted from
  members income for PAYE purposes.
• Therefore a SMS or MMS member, who is a member of
  a registered medical aid scheme, who does not
  structure for an employer contribution towards
  the scheme, still qualify for the tax benefit
  based on membership profile, limited to a maximum
  of the relevant SARS capped amount.

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Other benefits

• Home owners allowance
• The State Guarantee Scheme for housing, as
  maintained by the national Department of Public
  Works, applies to SMS members.
• Any amount can be structured for home owners
  allowance.
• Non pensionable cash allowance
• Any amount not structured for any of the other
  amounts has to be structured as non pensionable
  cash allowance.

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• Amendments to the structuring of the flexible
  portion
• The structuring of the flexible portion of the
  package may only be amended in the following
  circumstances
• One year after the implementation of the
  dispensation
• Adjustment of the remuneration scale (i.e annual
  cost of living adjustment)
• On transfer to another post
• Substantial changes to tax legislation
  Departments will be informed accordingly.
• Any changes to the total contribution to a
  registered medical aid scheme.

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• THANK YOU

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