presentation to portfolio committee

1

PRESENTATION TOPORTFOLIO COMMITTEE

Acting Director- General: Mr Les Kettledas

18 March 2008

2

Index

I. Unemployment Insurance Fund

II. Compensation Fund

3

I. Unemployment Insurance Fund

STRATEGIC PLAN & MTEF BUDGET 2008-2011

4

Presentation outline

• Part A– Overview– Strategic Perspective

• Part B– Strategic Outputs for 2008/09

• Part C– Performance Review

• Part D– Budget information– Strategic Priorities

5

Part A: Overview

6

Overview• Core function

– The collection of contributions and the provision of short term cash benefit on a monthly cycle to registered workers that become unemployed.

• Main products– Unemployment benefit– Illness benefit – Maternity – Adoption benefit– Dependants benefit

• Administration– UIA No 63 of 2001 - Administration– UCA No 4 of 2002 - Collection

7

UIF Strategic Perspective

• Vision

• Mission

• Objectives

8

VisionTo be a sustainable organisation providing effective short term financial relief to qualifying contributors & their dependents

MissionTo provide short-term insurance benefits to qualifying contributors through;

• Effective and efficient administration;• Ensuring accessibility of services to all stakeholders

9

4 balanced Strategic Objectives

• Financial:

To obtain clean audit opinion

• Stakeholders: To increase

stakeholder awareness and support of the Fund

• People:

To recruit and retain competent staff

• Processes:

To enhance the quality of service to our clients

10

Part B Strategic Outputs for 2008/09

11

Medium Term Output Targets1. Clean audit opinion

– Improve contribution collection from employers– Improve compliance by employers– Reduction of losses to the Fund– Improve financial and operations management and reporting

2. Increase stakeholder awareness and support for the Fund– Entrench UIF as a safety net against unemployment hardships– Educate stakeholders about their rights and obligations– Build relationships with stakeholders

3. Recruit and retain competent and caring staff– Develop a multi-skilled and competent workforce– Recruit and retain competent staff– Develop and implement a succession plan

4. Enhance quality of service to our clients– Optimal use of technology. Define and automate processes– Improve operational efficiency– Enhance IT systems

12

Part C: PERFORMANCE REVIEW

2007/08 PERFORMANCE REVIEW

ACHIEVEMENTS

13

2007/08 STRATEGIC REVIEW

• 4 STRATEGIC PRIORITIES ADOPTED– Investment in infrastructure to boost service

delivery– Improve financial sustainability of the Fund– Building a sound institution based on good

governance– Increase emphasis on performance

management not just finance

14

2007/08 REVIEW : Achievements

• Investment in infrastructure to boost service delivery– Document management system implemented– Awareness campaign reaching 20+ million

15

2007/08 : Achievements

• Improve financial sustainability of the Fund

2007/08

R’000

2006/07

R’000

CHANGE

R’000

CONTR. INCOME

6 685 381 5 861 405 823 976

TOTAL ASSETS

26 006 975 18 960 940

7 046 035

SURPLUS 4 497 765 2 999 342 1 498 423

16

2007/08 : Achievements

• Building a sound institution based on good governance

– Implemented– Risk management strategy and function– Corporate governance framework

17

2007/08 : Achievements

• Increase emphasis on performance management : EMPLOYERS

2007/08 2006/07 Change

Domestic 554 197 531 106 23 091

Commercial 586 442 513 409 73 033

Taxi 4 836 3 015 1 821

Total 1 145 475 1 047 530 97 945

18

2007/08 : Achievements

• Increase emphasis on performance management : EMPLOYEES

2007/08 2006/07 CHANGE

DOMESTIC 632 492 628 362 4 132

COMMERCIAL 6 716 066 6 587 977 128 089

TAXI 5 413 4 782 631TOTAL 7 353 971 7 221 121 132 852

19

2007/08 : Achievements

• Increase emphasis on performance management: BENEFITS

2007/08

R’000

2006/07

R’000

Change

R’000

Unemploy. 1 509 855 1 530 404 (20 549)

Illness 140 020 135 788 4 232

Maternity 345 140 308 223 36 917

Adoption 585 588 (3)

dependent 180 815 192 236 (11 421)

20

2007/08 : Achievements• HUMAN RESOURCES MANAGEMENT• EMPLOYMENT EQUITY SR 13 TO 15: 12 POSTS

NUM.T %. T CUR.N CUR.%

AFR.M 5 38.9 6 54.5

AFR.F 4 36.9 2 18.2

COL.M 0 1.4 0 0

COL.F 0 1.7 0 0

IND.M 0 1.5 1 9.1

IND.F 0 1.3 0 0

WHI.M 1 8.9 2 18.2

WHI.F 1 9.4 0 0

21

2007/08 : Achievements• HUMAN RESOURCES MANAGEMENT• EMPLOYMENT EQUITY SR 9 TO 12: 74 POSTS 62

FILLED

NUM.T %. T CUR.N CUR.%AFR.M 29 38.9 18 29

AFR.F 27 36.9 21 33.9

COL.M 1 1.4 3 4.8

COL.F 1 1.7 3 4.8

IND.M 1 1.5 3 4.8

IND.F 1 1.3 1 1.6

WHI.M 7 8.9 1 1.6

WHI.F 7 9.4 12 19.4

22

Part D: Budget Information

• MTEF Budget 2008

• Strategic priorities

23

Economic classification: MTEF 2008Staff costs

R’000

Goods & Services

R’000

Other

R’000

Benefits

R’000

Revenue

R’000

2007/08 403 000

447 717

71 000 3 913 000

10 087 000

2008/09 481 000

550 646

11 000 3 717 000

11 342 000

2009/10 507 000

582 661

3 200 4 252 000

12 463 000

2010/11 536 000

617 317

3 300 4 865 000

13 663 000

24

MTEF 2008 GROWTH TRENDS:SURPLUS - OVER R16 bn OVER 3YRS

• Total MTEF growth in Rand (bn) Surplus

– 2007/08 3.82– 2008/09 5.33– 2009/10 5.91– 2010/11 5.75

25

MTEF GROWTH TRENDSREVENUE – year on year + 11%• MTEF 2008 growth trend in Rand (bn)

– Revenue increase– 2007/08 10.087– 2008/09 11.342 +1.255– 2009/10 12.463 +1.121– 2010/11 13.663 +1.200

26

MTEF GROWTH TRENDSBENEFITS & RESERVES – Rands (bn)

BENEFIT RESERVES (yr)– 2007/08 3.9 1.4– 2008/09 3.7 1.2– 2009/10 4.3 1.2– 2010/11 4.9 1.9– Average benefit growth of 14% per year.– Actuary sourced estimates.

27

MTEF GROWTH TRENDS ADMIN EXPENDITURE: Average 9% over 3 years

• MTEF 2008 Admin growth in Rands (m)– Admin Increase– 2007/08 945– 2008/09 1,114 +169– 2009/10 1,137 + 23– 2010/11 1,200 + 63

28

MTEF 2008: GROWTH IN SUPPORT OF STRATEGIC PRIORITIES

– Enhancing quality of service to our clients – – Reducing paper trail through development of IT

solutions– Implement updated standard operating guide– Improve benefit value to clients– Input to social security review forum

– Obtaining clean audit report - improving revenue management:

– Implement Debt & Compliance Management strategy: compulsory declarations

29

MTEF 2008: GROWTH IN SUPPORT OF STRATEGIC PRIORITIES

– Obtaining clean audit report - improving revenue

management: – Improve debt collection through outsourcing of debt

collection services and application for court orders.

– Increase stakeholder awareness and support:– Advocacy & awareness campaigns through

» Media campaigns» Stakeholder meetings» Promotional material

– Obtaining clean audit report – Curbing fraudulent transactions –

– Implement bank verification strategy.

30

MTEF 2008: GROWTH IN SUPPORT OF STRATEGIC PRIORITIES

– Recruiting and retaining competent staff by providing resources for

• Training & workshops facilities

• Bursaries

• Learnerships

• Implementation of a work place skills plan

– Enhance quality of service to clients through the optimal use of

technology by: • continuously maintaining and enhancing the Fund’s management

systems

• Undertaking a special project to improve the quality of the Fund’s declaration database

• Implementing an integrated management information system for siyaya

31

Benefit Improvement - impact on surplus: R1.9bn over three years• Proposal under consideration:

– Impact of Change of IRR from a minimum 38% to 45% and a maximum 60% to 65% on estimated surpluses:

• 2008/09 R544m• 2009/10 R622m• 2010/11 R713m

– Assuming claim expenditure will increase on average by 14.66%

32

Financial achievements as at Financial achievements as at 31 December 200731 December 2007

December

YTD 07/08

(R‘000)

December

YTD 06/07

(R‘000)

% Change Increase/

decrease

Contributions 6,743,224 5,911,226 14

Investment income 1,291,481 767,991 68

Other income 1,634 1,008 62

Benefits expenditure

2,176,415 2,167,237 0.4

Operating expenditure

267,910 264,182 1

Staff cost 212,985 235,418 10

Net surplus 4,497,765 2,999,342 50

Investments 24,691,649 17,826,987 39

Technical reserves 11,590,807 10,405,748 11

Acc surplus 14,274,646 8,330,713 71

Total assets 26,006,975 18,960,940 37

33

Financial achievements as at Financial achievements as at 31 December 2007: 31 December 2007: Budget vs ActualsBudget vs Actuals

December YTD

2007/08

(R‘000)

Budget

YTD

2006/07

(R‘000)

Variance

(R’000)

Variance

%

Over/

Under

Contributions 6,743,224 6,553,239 189,985 3

Investment income 1,291,481 1,032,980 258,501 25

Other income 1,634 1,024 610 60

Benefits expenditure 2,176,415 2,934,894 (758,479) 26

Operating expenditure

267,910 392,886 (124,976) 32

Staff cost 212,985 307,356 (94,371) 31

Net surplus 4,497,765 2,876,862 1,620,903 56

34

II. COMPENSATION FOR CCUPATIONALINJURIES AND DISEASES ACT, 130 OF 1993 AS AMENDED (COIDA)

35

VISION AND MISSION

• MISSION

To provide compensation for occupational injuries, diseases and the rehabilitation of employees and deliver continuous value to all stakeholders

36

VISION AND MISSION

• VISION

To develop and implement solutions to provide quality and accessible services according to standards as set in consultation with stakeholders, whilst maintaining the Fund’s liquidity.

37

STRATEGIC OBJECTIVES

• Efficient social safety net• Financial viability of the Fund ensured• Effective cash and investments management• Management reforms and restructuring of the

Fund are effected• Enhance quality and access to COIDA services

and information• Effective data and information management

ensured

38

SPECIFIC OUTPUTS-(2007/08)

Reforming Management and restructuring the Fund through the following initiatives;

Establishing an automated Integrated claims and revenue management system

Refocusing the fund for better service deliveryDeveloping and implementing an advocacy,

communication and marketing strategyImproving turn-around time for claims settlementImproving collection and access to services

39

ACHIEVEMENTS

• 84% Reduction in backlog claims

• New imaging system Implemented

• Elimination of cheque payment method

• Improvement in Revenue Collection

• Communication Strategy in place

40

CHALLENGES

The following strategic outputs were not achieved in the reporting year;

• Policy on Early Return to Work not finalised

• Claims Turn-Around time still remains a challenge

• Slow progress in the implementation of IT hampers our finalisation of the Integrated claims and revenue Systems

41

FINANCIAL INFORMATION

FEB 20082007/082007/08

R’000R’000

2006/072006/07

R’000R’000

VarianceVariance

%%

Contributions revenue

3,336,907,301

2,579,469,438

22.7

Investment income

556,102,560

470,330,516

15.4

Other income 11,854,528 12,570,631

(-5.6)

Benefits paid 2,016,713,837

2,374,316,893

(-15.1)

Admin 313,420,910

463,733,456

(-32.4)

Surplus 1,820,279,668

355,058,219

55.5

Investments 16,480,639 ,000

15,142,223,000

17.8

42

FINANCIAL INFORMATION CONTINUED….

Benefits

No. of claims paid

No. of payments

made Amount

MEDICAL 543,449 886,511 1,430,143,788

COMPENSATION 324,627 331,672 655,543,479

TOTAL 868,076 1,218,183 2,085,687,267

43

STATISTICS ON CLAIMS OPENED SINCE 2000 TO

OCTOBER 2007

YEAR OPENED ACCEPTED % REPUDIATED PAYMENTS %

2000 237605 188208 79 2217 168821 89.6

2001 274635 224046 82 4047 198035 88.39

2002 249702 213106 85 4270 187649 88.05

2003 233660 203167 87 3730 180097 88.64

2004 220576 188703 86 2810 163545 86.66

2005 246841 211179 68 2698 182461 86.40

2006 216584 168082 78 1442 144983 86.25

2007 182723 117272 64 1040 82757 70.56

TOTAL 1862326 1513763 81 22254 1308348 86.43

44

MEDICAL PAYMENTS BY FEBRUARY 2008

Medical payment amountsR

1,326,350,503

R 1,152,944,094

R 1,050,000,000

R 1,100,000,000

R 1,150,000,000

R 1,200,000,000

R 1,250,000,000

R 1,300,000,000

R 1,350,000,000

Years 2006 2007

Am

ou

nts

pa

id

45

NUMBER OF MEDICAL ACCOUNTS PAID BY FEBRUARY 2008

MIS Medical payments stats

820345707644

0

200000

400000

600000

800000

1000000

Years 2006 2007

Nu

mb

er

of

pa

ym

en

ts

46

TTD PAYMENTS BY FEBRUARY 2008

MIS claims stats for 2007

37110

42540

34000

36000

38000

40000

42000

44000

TTD TTD

2006 2007

Years

Nu

mb

er

of

pa

ym

en

ts

47

TTD PAYMENT TOTALS BY FEBRUARY 2008

TTD payment amounts for 2007

R 108,322,326

R 97,472,467

R 92,000,000R 94,000,000

R 96,000,000R 98,000,000

R 100,000,000

R 102,000,000R 104,000,000R 106,000,000

R 108,000,000R 110,000,000

TTD TTD

Year 2006 2007

Am

ou

nts

pa

id

48

NUMBER OF PENSION PAYMENTS BY FEBRUARY 2008

PD pensions 2007

71222

73812

69000

70000

71000

72000

73000

74000

75000

Years 2006 2007

Nu

mb

er

of

pa

ym

en

ts

49

TTD PAYMENTS BY FEBRUARY 2008

MIS claims stats for 2007

37110

42540

34000

36000

38000

40000

42000

44000

TTD TTD

2006 2007

Years

Nu

mb

er

of

pa

ym

en

ts

50

PD LUMP SUM PAYMENTS BY FEB 2008

MIS-PD amounts paid

R 57,922,873

125,797,710

R 0

R 50,000,000

R 100,000,000

R 150,000,000

Years 2006 2007

Ao

un

ts p

aid

51

PRIORITIES FOR 2008/09

Consolidating the EFT Payments

Improving Collections

Improving the Claims Turn-around time

Development of Funds Information System

Addressing the Human Capacity Challenge

52

Account\ 2007/2008 2008/2009 2009/2010 2010/2011

Description Budget Budget Forecast Forecast

Total Assessment Income 3,030,474 3,240,809

3,435,257

3,641,372

Total Other Income 1,287,146 1,353,962

1,433,736

1,519,761

Total Revenue 4,317,620 4,594,771

4,868,993

5,161,133

Current Expenses 433,249 501,120 502,825

527,261

Transfers and Subsidies 2,338,775 2,671,113

2,831,381

3,001,263

Total Expenses 2,772,024 3,172,233

3,334,206

3,528,524

Surplus/Deficit 1,545,596 1,422,538 1,534,787

1,632,609

MTEF- BUDGET FOR 2008/09-2010/11

53

CONCLUSION

• We project a marginal inflationary increase of 7% on revenue over the period

• We also project an average 12% increase in Claims due rising medical costs

• Significant growth of 13% on Compensation to employees due to the engagement of contract workers

54

Thank you