Briefing to the Portfolio Committee on
Defence on the Mobility/Exit
Mechanism for Members of the SA
National Defence Force and the
Employee Initiated Severance Package
for Public Service Act Personnel
Prepared by the Chief of Human Resources, DOD
11 Jun 07
1
Aim

To brief the Portfolio Committee on Defence on
the implementation of the Mobility/Exit
Mechanism (MEM) for members of the SA
National Defence Force and the Employee
Initiated Severance Package (EISP) for Public
Service Act Personnel (PSAP)
2
Scope

Exit Mechanisms



Implementation of the MEM for SANDF
members and EISP for PSAP
Analysis of the Impact of Implementation of
the MEM and EISP
Conclusion
3
Exit Mechanisms: MEM

Legal basis




GEPF Rule 14.8 and 20 amended
Approved by National Treasury
Minister of Defence approved 5 Jul 05 (ito Section 55 of
Defence Act [42 of 2002])
Intent of MEM

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Should lead to a tangible rightsizing progress
Execute through realistic succession planning
Guard against the exodus of expertise/scarce skills
Advise members iro career progress as informed by the
Transformation and Restructuring imperatives
Choice to accept/reject offer – MEM is voluntary
4
Exit Mechanisms: MEM

(cont)
Guidelines for Succession Planning iro MEM
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Are functional groups/musterings constrained by
critical shortages
Status of ETD and learner throughput
Maintenance of expertise
Contribution to rightsizing (MTEF & longer)
Contribution to race-rank distribution correction
“Old” Service System contract expiries and
renewal justified
Succession planning:
•Role of Services and Divisions
5
Exit Mechanisms: EISP

Minister of PSA determination introduced the
EISP wef 1 Jan 06
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DOD introduced the EISP wef 31 May 06
EISP Benefits Structure

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Pension beenfits ito the Gov Employees Pension Law,
1996
Departmental benefits ito the Implementation Measures
EISP Application


Ito Section 3(3)(c), Public Service Act, 1994
Employees initiate their separation via the EISP
EISP Status

DOD expects possible 200 applications for the total
MTEF period
6
MEM FOR SANDF MEMBERS: BENEFIT
STRUCTURE
MEM
Departmental Benefits
Pension Benefits ito GEPF
EXIT PAY: 2 weeks for every full year service,
but a minimum of R 15 000.00 payable
LEAVE: Payment of leave credit
Less than 10 years
service and/or younger
than 55 years of age
10 years pensionable
service and 55 years or older
GRATUITY & ANNUITY
ACTUARIAL
INTEREST RULE
14.4.2
- NO SCALING DOWN OF PENSION
BENEFIT RULE 14.3.3(b)
- WITHOUT AN ADDITION OF
PENSIONABLE SERVICE RULE
14.2.4(b)
RESETTLEMENT: Actual expenses
MEDICAL PROVISION: Plus 10 years service,
option to buy into RFMCF up to age 60, and
eligible for medical service according to SAHMS
provisions
PRO-RATA SERVICE BONUS
CONTRACTUAL OBLIGATIONS: Released
STATE GUARANTEE: Third party debts
recovered from exit pay
OFFICIAL HOUSING: One month’s notice
SUBSIDISED MOTOR VEHICLE SCHEMES
RESKILLING: Maximum of R13 000.00 for
reskilling, training for employment opportunities, 7
and entrepreneurial skills
EISP FOR PSAP EMPLOYEES: BENEFIT
STRUCTURE
EISP
Departmental Benefits
Pension Benefits ito GEPF
Less than 10 years
service and/or younger
than 55 years of age
10 years pensionable
service and 55 years or older
EXIT PAY: 2 weeks for every full year service,
but a minimum of R 15 000.00 payable
LEAVE: Payment of leave credit
RESETTLEMENT: Actual expenses, 55 yrs &
older compensated according to PSCBC
Resolution 3 of 99 & Departmental Policies
MEDICAL: 55 yrs & older qualify for post-retirement
medical assistance:
Less 10 yrs equal 12 times employer contribution
10 to 15 yrs equal to 36 times employer contribution
15 yrs plus 2/3rd employer contribution per month
GRATUITY & ANNUITY
- NO SCALING DOWN OF PENSION
BENEFIT RULE 14.3.3(b)
ACTUARIAL
INTEREST RULE
14.4.2
- WITHOUT AN ADDITION OF
PENSIONABLE SERVICE RULE
14.2.4(b)
CONTRACTUAL OBLIGATIONS: Released
PRO-RATA SERVICE BONUS
STATE GUARANTEE: Third party debts
recovered from exit pay
OFFICIAL HOUSING: One month notice
SUBSIDISED MOTOR VEHICLE SCHEMES
RESKILLING: Maximum of R13 000.00 for
reskilling, training for employment opportunities,
and entrepreneurial skills
8
MEM AND EISP as at 31 May 2007: Approved by Minister of Defence
Race and Gender
9
EISP as at 31 May 2007: Approved by Minister of Defence
Race and Gender
10
MEM AND EISP as at 31 May 2007: Approved by Minister of Defence
(cont)
Age Group
11
MEM AND EISP as at 31 May 2007: Approved by Minister of Defence
(cont)
Age Group
12
MEM AND EISP as at 31 May 2007: Approved by Minister of Defence
(cont)
Fin year and Budget Holder
13
EXIT PER REASON OTHER THAN EXIT MECHANISM
Termination Type
Contract Expired
2005/06FY
500
2006/07FY
1 023
Deceased
864
Departmental Transfer 281
780
830
Discharged
Medical Discharged
Resigned
319
104
1 319
194
142
1 104
Retired
Total
350
3 737
312
4 385
Note: FY 2005/06: MEM/EISP = 12,8% of total exits
FY 2006/07: MEM/EISP = 18,7% of total exits
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Conclusion

Steady results are being achieved on stated
objectives eg representivity and age profiles
with the implementation of the MEM
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42% of all exits are middle-management (Col, Lt
Col, WO1, WO2)
30,2% of all exits are White middle-management
males
85,7% of all exits are White
Difficult to forecast the exact rightsizing
results as MEM/EISP are voluntary
The tempo of implementation for both the
MEM and EISP determines their success in the
DOD
Continuous (monthly) monitoring of progress
Continued emphasis on succession planning
efforts ito the MEM application
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DISCUSSION/QUESTIONS
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Exit Mechanisms: MEM

Overview 1994 to 2005

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Downsizing/rightsizing origins
• Interim Constitution (Act 200 of 1993) Section 236(c)
• Constitution (Act 108 of 1996) Section 24(1) of Schedule 6
and Provisions of the Interim Constitution continues in
force, Sections 236(1),(2),(3),(6) & (7)(b) & (8), 237(1)
and 2(a)
Above provisions were aimed at the size and affordability of
the DOD and informed the Defence Review of 1998
• Envisaged compulsory employer-initiated retrenchment
• Overtaken by the availability of the Voluntary Severance
Package (VSP) (July 1996) and the Employer Initiated Package
(EIP)
• The DOD steadily downsized towards 68 253 Regulars
(excluding 8 617 MSDS), mainly via natural attrition
• 67 167 personnel exited from 1 Jan 96 – 31 May 07 (20
902 via the VSP/EIP)
• Rightsizing = E3 and R3 (PFMA requirement iro resource
management)
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