Follow-up Presentation to the

S. S. MkhontoCompensation Commissioner

25 May 2010

Clearing of suspense accounts

The suspense account is reconciled every month to identify the items that need to be cleared.

R87 million was in the suspense account. This amount (R87 million) has been cleared by March 2010.

The reasons for this were :

1) due to beneficiary payments made in March 2008 but only reflected in the bank statement of April 2008. The proper accounting treatment of this transaction at year end should have been classified as outstanding payments instead of suspense account.

2) Deposits into the Fund’s bank account, with no reference numbers from employers. The bank has since assisted the Fund to trace and allocate these unknown deposits to the

relevant employers.

2

Total CF Staff Establishment

FILLING OF VACANCIES WITHIN THE FUND

3

Total No Approved posts

Total Filled Total No. Vacancies

Vacancy rate as at 31/3/2009

707 584 123 17.3%

Total No Approved posts

Total Filled Total No. Vacancies

Vacancy rate as at 31/3/2010

709

709

645

653

64

56

9.0%

7.8%(24/5/10)

Status on current 64 Vacancies

• 9 New appointments approved wef 01/04/2010.

• 24 Interviews held awaiting NIA results.

• 28 Posts already advertised, interviews scheduled for May.

• 3 Vacancies still to be advertised.

FILLING OF VACANCIES WITHIN THE FUND

4

Previous Status as at 31 March 2010

Current Status as at 24 May 2010

9 New Appointments approved wef 1/4/10

8 New Appoint approved wef 1/5/10

24 Interviews held awaiting NIA results 16 Interviews awaiting SAQA And NIA results

28 Posts already advertised, interviews scheduled for May

2 posts interviews – 20/5/10

5 posts interviews-31/5/10

4 posts interviews- 2/6/10

7 posts interviews- 3/6/10

8 posts interviews-4/6/10

2 posts to be readvertised

3 Vacancies still to be advertised 3 Vacancies confirmed to be advertised by HQ on 30/5/10

Month

2009 April 92 6 3 3       1     91

2009 May. 91   0 1             92

2009 Jun 92 0 1 0       1 2   94

2009 Jul. 94 2 4 1       1 1   97

2009 Aug. 97 9 5 2         2 1 98

2009 Sept. 98 8   2   1   3   1 91

2009 Oct. 91 12 4   1 1         85

2009 Nov 85 5 1       1 1     86

2009 Dec. 86   8       2 4     92

2010 Jan 92 20 1 1 1 2   3     74

2010 Feb. 74   0     1         75

2010 Mar. 75 14 5 1 1 1   2     67

TOTAL   76 32 11 3 6          

Month Vacancies New Appt.

Promote

Resign Dismiss Death Trans. Out

Trans. In

VS Retirement Total vac. Month end

HRM Vacancy statistics

Directorate Component Section SR Rank VacancyInterview

Date COMMENTSDate Sent to

SAQA Date Sent to NIA

CF 243000 Risk Management 12 Manager 1 11-Mar-10 Pending SAQA 5-Mar-10NIA Received 30 March 2010

Compensation 242422 C3 & C4 7 P ractitioner 1 29-Mar-10Pending NIA and SAQA result 30-Mar-10 8-Mar-10

Compensation 242421 C1 & C2 7 P ractitioner 1 29-Mar-10Pending NIA and SAQA result 8-Mar-10 8-Mar-10

CF 243000 Risk Management 7 P ractitioner 1 3-Mar-10 Pending SAQA

Support Service 241110 Auxillary Services 3 Operator 1 25-Mar-10pending NIA and SAQA result

Results received filled 1/5/10

Results received filled 1/5/10

Compensation 242310 Exempted Employers 5 Clerk 4 26-Mar-10pending NIA and SAQA result 1-Apr-10 19-Mar-10

Compensation 242413 Claims Index 5 Clerk 2 29 March 2010pending NIA and SAQA result 30-Mar-10 19-Mar-10

Compensation 242414 Claims Enquiries 5 Clerk 1 30 March 2010pending NIA and SAQA result 1-Apr-10 18-Mar-10

Income 241205 Revenue 2 5 Clerk 1 13 April 2010pending NIA and SAQA result 6-Apr-10 6-Apr-10

Income 241206 Revenue 1 5 Clerk 1 13 April 2010pending NIA and SAQA result 6-Apr-10 6-Apr-10

Income 241207 Enquiries 5 Clerk 2 13 April 2010pending NIA and SAQA result 6-Apr-10 6-Apr-10

Finance 241212 Bookeeping 5 Clerk 1 13 April 2010pending NIA and SAQA result 6-Apr-10 6-Apr-10

Medical Medical 5 Clerk 5 9-Apr-10pending NIA and SAQA result 29-Mar-10 24-Mar-10

Compensation 242323Unreported Accidents 5 Clerk 1 26-Mar-10

pending NIA and SAQA result 29-Mar-10 23-Mar-10

Compensation 242425 C6 7 P ractitioner 1 28-Apr-10

pending NIA and SAQA result 29-Apr-10 NIA received

CLAIM STATISTICS AT 31 MARCH 2010

8

FINANCIAL YEAR

CLAIMS REGISTERED

CLAIMS ACCEPTED

CLAIMS REPUDIATED

CLAIMS PAID

2007/8 213 241 180 996 1545 159 576

2008/9 209 830 180 756 1439 155 524

2009/10 203 711 139 302 620 107 293

Claims information The table indicates the total number of claims registered

during the past financial years, 2007, 2008 and 2009

It also indicates how many claims have been accepted, repudiated to date and how many have awards paid to date-Some claims from previous years have been re-opened and additional benefits paid during this financial year.

The difference between registered claims and accepted + repudiated are claims which have not been accepted due to outstanding information

Most not accepted claims are where the employee was off duty for 3 days and less, no first medical reports submitted or employee received first aid treatment and did not see a medical doctor. No compensation benefits are payable for such claims

Claims information cont…

Claims for 2007 financial year still not accepted by 31 March 2010 were 24 565

Claims for 2008 financial year still not accepted by 31 March were 31 490

Claims for 2009 financial year still not accepted by 31 March 2010 were 71 070

Compensation benefits processed in the 2009 financial year

All compensation benefits paid-TTD, PD plus monthly pensions.

Within these claims, are those that had not furnished required documents in the previous years and have only submitted during this financial year after our review process and follow up.

The slides indicate that there has been an increase on payments as compared to the previous financial years. This is attributed to the new policy on minimum earnings for TTD and the continuous review of previous claims.

Payment No. of payments Amount

Additional compensation 2 825 994.00

Burial expenses 337 2 422 986.58

Constant attendance allowance 6246 6 271 628.00

Lump sum to widows 400 3 886 038.07

Partial dependancy 15 164 230.09

PD lump sum payment (30%) 101 7 050 193.27

PD pension payment (<30%) 4329 85 458 303.70

PD pension (>30%) 86818 191 372 912.65

Pension 198059 343 574 258.68

TTD 43475 130 540 529.61

Widow & child pension 240 234 458.93

TOTAL 340159 771 801 533.58

Breakdown of compensation benefits processed payments

A claim is registered with an employers report of accident/disease

The treating doctor submits the first medical report as evidence of personal injury as required by the act.

The fund determines liability for the claim on the basis of the employer’s report and the doctor’s medical report

Where liability is accepted, the employer pays salary for the off duty days-maximum of 3 months where after the fund takes over- the fund reimburse the employer for the three months payments

While the employee is still off sick, the employer/employee submits progress medical reports indicating prognosis-enables continuous payment of salary by the fund.

Once the condition has stabilized, the treating doctor submits a final medical report for the fund to assesses permanent disablement.

The act requires the assessment of PD to be done only when the condition is stable. Claims with serious conditions can take up to two years to stabilize hence delayed settlement of such claims.

COIDA PROCESS

Unaudited – March 2010

(R000)

March 2009(R000)

Contributions revenue 4 321 898 4 513 720

Investment income 1 687 196 2 073 004

Other income - 21 228

Compensation claims 647 122 150 133

Medical claims 1 441 337 1 540 340

Increase in the provision for outstanding claims

- 1 239 000

TOTAL BENEFITS PAID 2 088 459 2 929 473

Admin 783 045 433 565

Year end provisions - 2 073 796

Surplus \ Deficit 3 137 590 1 171 118

The actuarial valuations for the year 2009/10 is in the process of being finalised by the actuaries.

The valuation will only be available after the finalisation of the audit ie. August 2010 as actuaries only utilize audited financial statements.

As at the 31 March 2010 the following figures were available for Compensation benefits paid on the financial system

Compensation benefits paid

Compensation claims** 647,122

Medical claims 1,441,337

** Compensation Claims

Paid to employees 598,944

Paid to employers 48,179

Variance between processed and actual paid The difference of(R124 m) between the total actual

paid benefits by the Finance Directorate (647m) and the total processed by the Claims Directorate (R771m) is caused by the delays in submission of banking details by beneficiaries.

This problem is being addressed through a special campaign-see slide 18

• The current unclaimed monies is R28.4 million

• A notice was published in the Government Gazette volume 529 No 32346 of 3 July 2009, to request all beneficiaries of unclaimed monies to claim their dues.

• During the month of March the Fund ran a month –long radio and newspaper advertisement to request the beneficiaries of the unclaimed monies to come forward and provide the Fund their banking details

• Since the advert went out 1 500 beneficiaries came forward and provided the Fund with the banking details and all have since been paid .

UNCLAIMED MONIES

18

19

DEPARTMENTS CONTRACTUAL OBLIGATIONS TO SIEMENS (High Level)

• to provide optimised and documented business processes for automation

• to ensure user and management participation in systems automation

• to transfer to Siemens, DoL ICT employees prior to contract commencement

• to ensure timely payment of the unitary fee

• to inform Siemens 12 months prior to expiry whether the contract will be renewed

• to compensate for delays or defaults caused by the Department

• transfer of legacy assets to Siemens

• to ensure a change management governance process are in place

• to ensure a secure working environment

• to manage third party service providers eg. SITA

OPERATIONAL CHALLENGES FROM SYSTEMS

• Employment Services systemo slow responseo problems with saving of documentso unstable

RESOLUTION : this system has been re-developed and optimised with no major issues reported

• Compensation Fund systemso disparate and legacy systemso scanning challenges

RESOLUTION :Development of an integrated claims management system to commence. Scanning environment has been upgraded.

• Other General challengeso bandwidth at labour centres (contributes to slow response)

109 centres bandwidth have been upgraded in the last 9 months by SITA

RAND MUTUAL SYSTEM

• The Fund conducted a Proof of Concept and then planned to pilot the system

• A budget of R2 million was approved for this process

• Total costs to Rand Mutual are R524 427.10

• These costs relate to user training, systems setup, resources etc.

COMPENSATION FUND CLAIMS SYSTEM DECISION• An audit was conducted on the Rand Mutual project which

resulted in a negative finding

• The decision was taken to implement the Siemens solution due to the following :

- will be developed based on CF’s business requirements and processes and will be customized for CF

- will be a fully integrated system, including the financial module, with additional components eg. Customer Relationship Module

- will be aligned to the DoL systems architecture and function across the organisation seamlessly including integration with components of other DoL systems eg. Integrated Client Database

- development of the solution and infrastructure is included within the PPP

- support and maintenance is from one service provider

High-Level Project Schedule – CF claims system

Activity June July Aug Sep Oct. Nov Dec Jan2011

Feb2011

March2011

Requirements Workshop

Solution Integration Design

Blueprint adaptation by all parties

Blueprint Sign-Off

Realization

Final Preparation

Training of 100 CF users

GO LIVE

Roll-Out and Cut-over

Data interrogation, cleansing & preparation

Data Migration

Project close out

15/06/10

30/07/10

30/11/10

31/03/11

Year ended Unitary fee Additional services

Total

31-Mar-03 40,833,333 - 40,833,333

31-Mar-04 125,463,046 36,806,561 162,269,607

31-Mar-05 136,962,744 22,646,145 159,608,889

31-Mar-06 160,210,820 14,130,604 174,341,424

31-Mar-07 158,421,099 21,988,865 180,409,964

31-Mar-08 194,901,365 11,386,879 206,288,244

31-Mar-09 202,499,896 9,694,687 212,194,583

31-Mar-10 219,218,864 12,248,944 231,467,808

TOTALS 1 238 511 167 128 902 685 1 367 413 852

PPP PAYMENTS PER ANNUM

26