TUESDAY, 16 OCTOBER 2001 __

                PROCEEDINGS OF THE NATIONAL ASSEMBLY
                                ____

The House met at 15:10.

The Deputy Speaker took the Chair.

ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS - see col 000.

                             NEW MEMBER

                           (Announcement)

The Deputy Speaker announced that the vacancy caused by the loss of membership of Dr S E Mzimela had been filled, in accordance with item 6(3) of Schedule 6 to the Constitution, 1996, by the nomination of Mr W G Makanda, with effect from 2 August 2001.

                                OATH

Mr W G Makanda made and subscribed the oath in the Speaker’s office this morning.

                          NOTICES OF MOTION

Mr K M ANDREW: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move:

That the House -

(1) expresses its concern at the announcement by Zimbabwean President Robert Mugabe that he is abandoning market-led economic policies in favour of a socialist-style command economy;

(2) recognises that this move will -

   (a)  hasten the economic decline of the country leading to increased
       shortages and hunger; and
   (b)  have a destabilising effect on the region; and

(3) therefore, calls on President Mbeki to -

   (a)  revise his policy of quiet diplomacy towards Zimbabwe in the
       interests of the economic well-being of the region; and


   (b)  make it clear that the behaviour of President Mugabe and his
       government will preclude Zimbabwe from being part of the New
       Africa Initiative until such time as the Mugabe government
       changes its current policies and practices.

[Applause.]

Mrs S A SEATON: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the IFP:

That the House -

(1) notes with shock and sadness that an intruder on a farm at Kromdraai, near Krugersdorp, senselessly and brutally shot dead a mother and her daughter, and then critically wounded another daughter on Monday, 15 October 2001;

(2) conveys its condolences and sympathies to the family of the deceased and prays for the recovery of the wounded daughter;

(3) further notes that a man allegedly in possession of two firearms that belonged to the family was arrested on Tuesday morning, 16 October 2001, in connection with the murders; and

(4) commends the police for the swift manner in which they tracked down and arrested the suspect.

[Applause.]

Mrs Z A KOTA: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:

That the House -

(1) notes that President Thabo Mbeki visited the Eastern Cape last weekend;

(2) further notes that the President used this visit to hold imbizo and to interact with ordinary people;

(3) believes that consultation with ordinary people and the value that the ANC places on people-driven development is important for our country; and

(4) commends the President for his successful visit to the Eastern Cape and his commitment to eradicate the poverty and violence which plague this province.

[Applause.] Dr S J GOUS: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move:

That the House -

(1) notes that -

   (a)  the MRC report on HIV/Aids mortality indicates that the epidemic
       is undoubtedly the biggest cause of death in South Africa;


   (b)  the Government is misusing Statistics SA to discredit the MRC
       report in order to defend the President's unjustifiable position
       on this matter;


   (c)  it is inconceivable that the Government is using one state
       department to discredit another; and


   (d)  a visit to any hospital or mortuary will confirm that the MRC
       report is a true reflection of the severity of the disease; and

(2) calls on the ANC Government to accept that HIV/Aids is the biggest killer of South Africans and to act accordingly, before more South Africans become part of our HIV/Aids statistics.

[Applause.]

Mr M N RAMODIKE: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the UDM:

That the House -

(1) salutes the many South Africans who live with HIV/Aids and the many who are committed to finding solutions, in the face of the Government’s stupidity bordering on genocide;

(2) expresses its disgust at the Government’s delays and reluctance to release the Medical Research Council’s report about HIV/Aids, coupled with blatant attempts at discrediting facts which do not fit with the President’s confused agenda;

(3) expresses its concern at yet another example that Government is out of touch with the realities in South Africa, as indicated by Gauteng’s overcrowded mortuaries being allegedly forced to pack up to three corpses into a drawer made for one body;

(4) calls on all South Africans to unite in their fight against the challenge of HIV/Aids despite the Government’s self-inflicted incapacity; and

(5) calls on the Government to acknowledge its incapacity in dealing with HIV/Aids and thus abandon its stubborn resistance and rather …

[Time expired.]

Ms P K MOTHOAGAE: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:

That the House -

(1) notes with deep concern the deliberate failure of the DP spokesperson on public accounts, the hon Taljaard, to honour an engagement with the students of the Eastern Cape Technikon;

(2) further notes the consistent failure of the same member and the entire DP component to meet the Mozambican parliamentary delegation recently;

(3) believes that these failures confirm that nonracism, nonsexism and gender equality are foreign to the DP and that these actions militate against the very essence of nation-building; and

(4) urges the hon Tony Leon and his party to treat all delegations equally and to honour engagements with all sections of the South African population and not only those from Europe and privileged backgrounds.

[Applause.]

Miss S RAJBALLY: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the MF:

That the House -

(1) acknowledges the Hindu nine-day celebration of Navaratri in honour of the goddesses Durgah, Lakshmi and Saraswati, representing strength, knowledge and wealth;

(2) takes this opportunity to congratulate and wish well all those followers celebrating these festivities spent in dance, fast and joy throughout the world; and

(3) wishes that this fast brings peace and harmony to our country.

Dr A I VAN NIEKERK: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the FA:

That the House -

(1) notes that the ANC Government has followed policies in South Africa which destroy jobs rather than create conditions conducive to increased employment;

(2) further notes that over half a million jobs have been destroyed since the ANC came to power;

(3) recognises that rigid labour legislation, low productivity, deteriorating infrastructure, ill-considered taxes, under-funded law enforcement, corruption, mismanagement and a foreign policy based on sentiment rather than good sense are all working against job creation in the future; and

(4) therefore calls on the ANC to step into the 21st century and look at successful programmes in the world, and learn how to encourage job creation in South Africa.

[Applause.]

Dr R H DAVIES: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:

That the House -

(1) notes reports that a United States bomb fell near a crowded marketplace and killed civilians in Jalalabad;

(2) further notes reports that predict that 100 000 Afghan children could die this winter unless food reaches them in six weeks;

(3) believes that innocent and unarmed civilians, especially children and women, must be protected from injury, pain and suffering; and

(4) reiterates our view that whilst perpetrators of acts of terror are given no quarter, everything must be done to ensure that civilians, children and women are not caught in the crossfire.

[Applause.]

Adv H C SCHMIDT: Mevrou die Speaker, ek gee hiermee kennis dat ek op die volgende sittingsdag namens die DP sal voorstel:

Dat die Huis -

(1) kennis neem van die plaasmoord gister helder oordag te Krugersdorp, Gauteng, op ‘n ma en haar 14-jarige dogter;

(2) sy leedwese en simpatie uitspreek teenoor die Jooste- familie oor die lafhartige, koelbloedige en sinnelose moorde;

(3) die SA Polisiediens gelukwens met die inhegtenisneming van ‘n verdagte vanoggend;

(4) kennis neem dat hierdie voorval kort op die hakke volg van ‘n plaasmoord in die Lady Grey-omgewing; en

(5) derhalwe ‘n ernstige beroep doen op die Minister van Veiligheid en Sekuriteit asook die Kabinet om -

   (a)  daadwerklike stappe te doen om voorkomende maatreëls teen
       misdaad in te stel; en


     b) hulle afkeer van plaasmoorde onomwonde in die openbaar uit te
        spreek. (Translation of Afrikaans notice of motion follows.)

[Adv H C SCHMIDT: Madam Speaker, I hereby give notice that on the next sitting day I shall move on behalf of the DP;

That the House -

(1) notes yesterday’s farm murder of a mother and her 14-year-old daughter, which took place in broad daylight at Krugersdorp, Gauteng;

(2) expresses its condolences and sympathy with the Jooste family in respect of these cowardly, cold-blooded and senseless killings;

(3) congratulates the SA Police Service on this morning’s arrest of a suspect;

(4) notes that this incident follows closely on a farm murder in the Lady Grey area; and

(5) consequently makes an earnest appeal to the Minister of Safety and Security as well as the Cabinet to - (a) take decisive steps to introduce crime prevention measures; and

   (b)  publicly and unequivocally express their condemnation of farm
       murders.]

Mr V B NDLOVU: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the IFP:

That the House -

(1) notes that 3 000 kg of dagga, 1 200 litres of alcohol and 4 engines, amongst other items, were confiscated in raids by the police in a high visibility anti-crime operation in Pretoria;

(2) urges the public to co-operate with the police during such operations in order to make their work easier and to try and rid the communities of criminal elements; and

(3) commends the police force throughout South Africa for the sterling work that they are doing under trying condition.

Mnu M M MASALA: Somlomo, apha ndenza isaziso sokuba xa le Ndlu iphinda ihlala ndiza kwenza isiphakamiso egameni le-ANC:

Sokuba le Ndlu -

(1) ivuyisane noRhulumente kunye neSebe lezaManzi namaHlathi ngempumelelo yabo ekufikeleleni kwizigidi ezisixhenxe zabantu kwiphulo lokuzisa amanzi acocekileyo eluntwini jikelele;

(2) iqaphele ukuba le nto ithetha ukuba ama-55 eepesenti zabantu abangazange baxhamla manzi acocekileyo, namhlanje bawafumene phantsi kwalo Rhulumente we-ANC;

(3) income igalelo lezigidi ezingama-R600 elenziwe yi-Mbumba yeZizwe zaseYurophu (European Union) lokunceda ukuba ama-45 eepesenti zabantu abangekawafumani amanzi acocekileyo, bawafumane ngokukhawuleza; nokuba

(4) iqaphele kananjalo ikhuthaze uRhulumente ngokuba ethe gqolo ukuzalisekisa iimfuno nombono wokuphucula impilo yabantu abahlelelekileyo, ngakumbi abasemaphandleni. (Translation of Xhosa notice of motion follows.)

Mr M M MASALA: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:

That the House -

(1) congratulates the Government and the Department of Water Affairs and Forestry on their success in reaching out to 7 million people during their Clean Water Campaign;

(2) notes that this actually means that 55% of people who never had access to clean water before, now do have access through the efforts of the ANC-led Government;

(3) notes that the contribution of R600 million made by the European Union will help towards accessing water to the 45% of people who still do not enjoy clean water; and

(4) notes and encourages the efforts of the Government to meet the needs of poor people, particularly those that live in rural areas.]

Mr J J NIEMANN: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move:

That the House -

(1) notes that according to a report by the SA Bitumen Association -

   (a)  more than 50% of South Africa's roads are now ``inefficient'';


   (b)  20% of the 700 000 road accidents in 1999 was due to the ``road
       environment''; and


   (c)  the state could find itself as a potentially unsuccessful
       defendant in approximately 70 000 to 140 000 accident claims per
       year;

(2) calls on the Minister of Transport to explain why his department has neglected road maintenance and allowed road safety to deteriorate to such an extent; and

(3) believes this is a wake-up call for the Minister of Transport to take the necessary steps to improve road safety and maintenance, because people’s lives are at stake.

Mr M E MABETA: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the UDM:

That the House -

(1) notes the out-of-court settlement reached between South African farmers opposed to the repatriation of about 15 000 Zimbabwean farmworkers and the Government, which has led to Robert Mugabe threatening to nationalise more farms;

(2) expresses concern at the announcement by President Mugabe for regressive economic policies entailing the nationalisation of private property and the disruption of the economy;

(3) concedes that -

   (a)  Robert Mugabe is blatantly holding South Africa and the region
       hostage;


   (b)  he is making a mockery of President Mbeki's Millennium African
       Recovery Plan and its principle of the rule of law, responsible
       economic policies and democracy; and


   (c)  his active promotion of political and economical policies that
       lead to the destabilisation of the region brings into question
       the credibility of the diplomatic approach we have adopted
       towards that country ...

[Time expired.]

Mrs B TINTO: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:

That the House -

(1) notes that -

   (a)  over 800 delegates from all constitutional structures of the ANC
       Women's League met in Shaft 17, Johannesburg, for a consultative
       conference last weekend; and


   (b)  the ANC Women's League took stock of the process of
       transformation under the leadership of the ANC;

(2) believes that the ANC Women’s League and the women of South Africa are playing a critical role in the process of social change in our country; and

(3) congratulates the ANC Women’s League for holding a successful consultative conference.

CONGRATULATIONS TO DEPUTY PRESIDENT ON BEING AWARDED HONORARY DOCTORATE

                         (Draft Resolution)

Mr G Q M DOIDGE: Madam Speaker, I move without notice:

That the House -

(1) notes that Deputy President Jacob Zuma was awarded an honorary doctorate by the University of the North on Saturday;

(2) recognises that in the past the University has honoured great political leaders who have contributed to the democratic struggle in Africa, such as the late ANC President, O R Tambo, former President Nelson Mandela, the late Mwalimu Nyerere and Dr Kenneth Kaunda; and

(3) congratulates Deputy President Zuma on being awarded this honorary doctorate which serves as recognition for his role in the advancement of democracy in our country and on our continent.

Agreed to.

CONGRATULATIONS TO KOFI ANNAN AND UN ON BEING AWARDED NOBEL PEACE PRIZE

                         (Draft Resolution) Mr G Q M DOIDGE: Madam Speaker, I move without notice:

That the House -

(1) notes that the Secretary-General of the United Nations, Mr Kofi Annan, and the United Nations itself have been awarded the Nobel Peace Prize for their work in building a more organised and peaceful world;

(2) recognises that the South African Government is committed to a partnership with Mr Annan and the UN in its efforts to create a better world for all, underpinned by peace and security;

(3) congratulates Mr Annan and the UN on receiving this prestigious award; and

(4) pledges all possible support to their endeavours in the promotion of world peace.

Agreed to. PENSION FUNDS SECOND AMENDMENT BILL

                       (Second Reading debate)

The MINISTER OF FINANCE: Madam Speaker and hon members, it is a pleasure to table the Second Reading of the Bill, which deals essentially with the apportionment of surpluses built up in pension funds.

This Bill, some members will recall, served before the committee about two years ago. It was recalled for further discussion and, after it served in the committee, it was followed by exhaustive and exhausting discussions in the context of Nedlac. Within Nedlac we failed to reach an absolute consensus, but the process in Nedlac allowed for extensive learning - certainly by Government - of the views of stakeholders. Drawing on these experiences we have now produced a Bill that provides for both balance and equity.

In the context of the hearings in the Portfolio Committee on Finance, there were lengthy presentations by a number of organisations who have a keen interest in the outcome of this legislations, and I think it is appropriate that we express our appreciation to those organisations. Indeed, they were able to contribute to fairly significant refinement of the Bill and to the development of a series of regulations.

The Bill is essentially about redressing past injustices. It provides for the equitable and sustainable apportionment of actuarially determined surpluses in pension funds. But the Bill also introduces new obligations for the provision of minimum benefits in private pension funds.

It is quite important that we just pause for a moment and consider what these actuarial surpluses are. Essentially, they are about constructing a careful balance between the assets and liabilities and ensuring that the assets in funds can cover the liabilities. However, the Bill also allows boards of funds to establish contingency reserves to deal with instances like capital gains tax and incidents of HIV/Aids within the fund. The Bill also allows for the creation of investment reserves to cushion against the vagaries of stock markets. The co-principles are those of the involvement of stakeholders, permits on equity, on limitation of risk sharing for employers and employees together, on the protection of savings performance, on the separation of the past and future, and of maintaining or developing stability in the sector. In constructing the balance, it calls for us to develop an approach that recognises that no group could claim exclusive rights to the surpluses, except, perhaps, to recognise that former members and pensioners of funds, who were members or pensioners since 1 January 1980 had a first claim on actuarial surpluses.

It was also established that on 31 December last year, there was an estimated R80 billion of surpluses build up in private pension funds. The surpluses were sometimes built up because of better than expected investor performance, but more often than not they were the result of inadequate information and education. And I think that what we were able to establish in the course of the engagement on this Bill, was that members have a reasonable expectation of an improvement in their benefits if surpluses exist. What clearly will be ongoing will be the convening of technical committees within each fund of the representatives of employers, employees and pensioners together to revalue and determine the assumptions and to ensure that the underlying minimum benefits are in line with what the pension fund can afford.

In addition, the process now brings into being a series of regulations in the draft Bill. Firstly, that the board of the fund shall appoint a person or persons to represent the interests of former members. Secondly, as I said earlier, that former members are viewed as all those who were members in the period between 1 January 1980 and the present. Thirdly, the employer becomes responsible for any part of the surplus which he or she or they improperly use. Fourthly, that there be a top up to ensure that former members and pensioners have a first charge against the surplus. Fifthly, that the remainder be equitably distributed in the interest of all stakeholders. The Bill does not require funds that do not have a surplus now to create a deficit by topping up. The Bill does create a special tribunal and allows pension funds to draw from panels for this. There is a very clear commitment in the Bill and in the entire approach to ensure that employers do not save and cash from surpluses, because we believe that this will create huge macroeconomic risks. The Bill also creates an obligation on employers to fund future deficits. I trust that this Bill will be supported by all parties in the House, but in doing that, I think we must recognise that having the legislation is only part of the battle. What lies ahead is the enormous amount of education that will be necessary of all members of pension funds, but especially higher intensity training of trustees and, secondly, that there needs to be the exercising of caution in respect of investment decisions.

This legislation brings to an end a saga that we all lived through in respect of this Bill, a saga that was marked certainly by a lot of passion and greed, a saga that went to the heart of the power relations between employers and employees, and between wronged people who have future expectations. But it is a saga that has spanned the period, certainly, since the early 1980s.

I would like to express sincere appreciation to Deputy Minister Mpahlwa, who is in Danhug at the moment, for having piloted this through and sat through those very exhausting negotiations, to the team in the National Treasury and, in particular, Elias Masilela and Chris Malan, to the Financial Services Board and the Chief Actuary, Jeremy Andrew in particular, to the various organisations that made presentations at the Portfolio Committee on Finance, to Nedlac and its Executive Director Phillip Dexter for their involvement in trying to reach consensus and, last but not least, to all members of the Portfolio Committee on Finance and the chairperson, Barbara Hogan, in particular.

In tabling the Pension Funds Second Amendment Bill for its Second Reading debate, I invite all parties in this House to support the Bill. [Applause.]

Chairperson, I apologise; I should call you ``Deputy Chairperson’’.

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Yes, we do these things behind your back, Minister.

The MINISTER: Chairperson, I shall ask that you kindly install rear-view mirrors here.

The DEPUTY CHAIRPERSON OF COMMITTEES: Yes.

Ms B A HOGAN: Chairperson, this is an important Bill, because, as the Minister said, it will redress past injustices that were done. Briefly, a surplus that was calculated at about R80 billion arose in pension funds over a long period of time. How is it that a surplus of that magnitude can arise that easily? Well, part of the reason is that those people who left funds did not receive the full amount which they should have received. Those pensioners who were receiving pensions from that fund, were possibly not receiving the amount that they should have been receiving.

Those employers, particularly when one talks about defined benefit funds, who were contributing to that fund, were contributing more than they should have, because they were basing their contributions on conservative actuarial figures. And finally, of course, investment returns were greater than was anticipated. So over a period of time, a surplus which is now a significant one, started to develop in these funds.

The question then arose as to who should be entitled to that surplus. And that is where the deadlock happened in Nedlac. Businesses, believing themselves to be the main contributors and the main carriers of risk, particularly as regards defined benefit funds, believe that they should have a right to those funds, because they were, in fact, contributing in excess of what they should have.

However, in a famous court judgment it was ruled that the pension funds belong to the fund and it is the board that should make a decision on what should be done with those funds. Likewise, the court noted that there was no legislation ruling on what should be done with surpluses in those funds and, therefore, suggested that Parliament should enact such legislation. And that is what we are doing here.

The approach taken by this legislation is to say that all stakeholders should have access to that surplus. In other words, current members of the fund, who include current pensioners, contributors, former members or people who left those funds, and employers - and that is very important - should have access to that surplus.

However, former members and pensioners, particularly former members who left those funds - remember that in the 1980s there was a concerted drive by the trade union movement to ensure that members transferred out of the defined benefit to defined contribution funds for a number of reasons, which I will not go into now - should have prior access to that surplus and actuaries in the fund will determine what surplus should be their due. They should then have that prior access.

After that, the surplus funds remaining in that fund would then be divided between members and employers and placed in the respective surplus accounts of each. The Bill goes further and makes provision for a minimum benefit that a person should enjoy when they leave the fund or when that fund terminates, when it is liquidated or when it converts from a defined benefit to a defined contribution. And it also ensures - remember these are only minimum benefits - that injustices in the past, where people were allowed to leave pension funds without taking the full amount that they should have taken, are now redressed.

In this way, it is envisaged that surpluses will no longer be able to develop in the funds as they did in the past. Likewise with pensioners, there is a prescription on what should be a minimum pension increase. That minimum pension increase will be inflation-linked but it will not be indexed because, as we all know, inflation is a tiger that is often very difficult to control.

Once the surplus is distributed to the members and employers, it can only be used under certain conditions. It is not a freehold and employers cannot use it as they like. One of the important conditions for employers is that they can use it for a contribution holiday. They can also, importantly, use it if a retrenchment is required. This can facilitate the use of employer’s surplus funds and the prevention of job losses.

Every pension fund is now going to have to identify its former members through advertisements, through checking, through records and through consultation with unions. A person has to be appointed by that fund to specifically represent the interests of those former members. Each fund will then have to work out a plan of how it is going to apportion that surplus. Once that plan is drawn up, it must be submitted to the Registrar of Pension Funds, who can then approve it. The registrar must also receive a report of all the complaints that have been lodged. If the registrar is of the opinion that a proper apportionment process has not taken place or that the pension fund itself cannot apportion the surplus - as there is a deadlock in the fund - the registrar can refer it to a special tribunal, which will then take a final decision.

Therefore, there are various protections built into this process of surplus apportionment. The other protection is that at least 75% of the members of the board of the fund must approve the scheme. But there is a certain period in which members cannot complain. Importantly, it will not be the pension fund adjudicator who will be determining the complaints but a special tribunal.

I would like to thank Christopher Malan, Mr Elias Masilela, Jeremy Andrew, and in particular the trade union movement, who paid scrupulous attention to this Bill and interacted with our committee in many ways, for the hard work they put into this legislation.

What has been disappointing is that business interacted and engaged with the committee in a far less sustained way. One hopes that the needs of business have been met, as we often had to conjecture what the needs would be. But, as the Minister has said, the next two to three years are going to be crucial years in which the success of this venture will be tested. The actuarial profession is going to be placed under enormous strain to meet the requirements of this fund, and we request all former members and pensioners to please contact their funds to ensure that they can benefit from what this legislation is trying to achieve. [Applause.]

Mr K M ANDREW: Mr Chairperson, this Bill deals with the distribution of surpluses in pension funds and future minimum benefits for members. It is an extremely complex Bill and has been very controversial. Nedlac debated it for years and no agreement could be reached between Government, business and labour.

It has been subjected to thorough examination and substantial amendment by the Portfolio Committee on Finance. During this process, the committee was given considerable assistance by various officials from the National Treasury and the Financial Services Board, particularly Mr Jeremy Andrew, to whom a special word of thanks is due.

Over the years pension funds, particularly many defined benefit pension funds, have accumulated large surpluses totalling an estimated R80 to R200 billion. The Bill is designed to determine who is entitled to that money. Business claims that the employer is responsible for deficits in a fund and is therefore entitled to any surpluses. Labour points out that a pension fund is an independent juristic person, and not simply an extension of the employer, and therefore claims that all the money, including surpluses, belongs to members and former members.

Those pension funds which have surpluses differ as to the causes giving rise to the surplus. Major causes include poor benefits paid to employees who resigned or were retrenched; low cost-of-living increases granted to people already on pension; investment returns above the expected levels; and unreasonably low transfer of funds when members and employees transferred from defined benefit pension funds to defined contribution pension funds - something which happened on a large scale during the 1980s and the early part of the 1990s. [Interjections.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Order, hon Mndende!

Mr K M ANDREW: In his evidence to the portfolio committee, Prof John Murphy, the Pension Fund Adjudicator, summarised the situation very well, and I quote:

The legislative scheme in general seems to embody an attempt at a legitimate compromise, reflected, I suspect, in the fact that no single interest group will be entirely satisfied with the result.

And further:

In the period leading up to the democratisation of our country, employers and trade unions, in pursuit of their own interests and with an eye on international trends, set about extensively restructuring pension fund rights and liabilities from a defined benefit to a defined contribution basis of funding and entitlement. The schemes and arrangements which followed, designed by actuaries and consultants acting on behalf of employers, more often than not calculated transfer values on the low side, resulting in substantial surplus assets being left behind in the defined benefit funds for use by a handful old order members and the employer, with the ultimate aim in many instances of repatriating the bulk of the surplus to the employer.

Had the actuarial methodology and assumptions applied in the original calculations produced more equitable transfer values, the present legislation would not have been necessary.

The Bill steers a middle course, attempts to remedy the injustices of the recent past in a rational way, and ensures a fair deal for all members of pension funds in the future. The Democratic Alliance will therefore be supporting the Bill. There are, however, some issues that deserve further comment. [Interjections.] I know the Minister only likes compliments, but of course the world is not perfect. Neither is he nor his Ministry.

Firstly, as the Pension Fund Adjudicator highlighted, the Bill is an acknowledgement that the regulatory function has failed us. There has been a failure of regulation, which the Bill seeks to remedy. Can the Minister assure us that the necessary regulatory mechanisms and capacity are now in place to monitor the implementation of pension funds legislation - this Bill and others?

Secondly, it was disappointing and worrying that the Financial Services Board was unable to provide the committee with reliable statistics relating to the size of various fund categories, transfers etc, apparently because information was lost during a change in computer systems.

Finally, and most importantly, I would like the Minister to tell Parliament when similar legislation dealing with withdrawal and future benefits of Public Service pension funds is to be tabled. We should be practising what we preach to the private sector.

The Democratic Alliance will be supporting the Bill.

Mr H J BEKKER: Mr Chairperson, this Bill has four main objectives: Firstly, minimum values that have to be paid from retirement funds in future are introduced; secondly, the Bill will prevent the creation of future pension fund surpluses by introducing minimum increases and interest for early leavers of the fund; thirdly, the Bill deals with the equitable distribution of the existing surpluses in pension funds between members, former members and the employer; and fourthly, the Bill determines how the surplus may be used in future.

The existing pension funds surplus had been estimated at more than R80 billion in 1999. Clearly, whatever the reasons for the accumulation, employers and employees are entitled to an equitable share of the surplus. The Bill creates a formula for achieving this purpose which can be said to be fair and reasonable.

Importantly, the Bill entrenches the principle of protection for pension funds in dealing with a fall in the value of their assets and other contingencies. This is vital for the long-term survival of the retirement industry in South Africa.

The Bill, however, also caters for past members who left funds, transferred, converted or were retrenched. In this way, members of the portfolio committee were of the opinion that the distribution of the surplus would attain greater legitimacy and equity for a greater number of people. The problem that may arise by going back too far in the past, is that the pension funds may no longer have these records in place and as such may open themselves up to litigation.

Let us in this case envisage a scenario where a company in trouble has been taken over and completely restructured. In practice, cases do exist where such companies have retrenched more than 50% of their workforce. The question arises now whether such retrenchments and utilisation of surpluses could theoretically be deemed improper or illegal, despite the fact that at the time of implementation they were allowed in terms of the Pension Funds Act of 1956 and all other applicable legislation; were approved by the board of trustees of each fund; involved rule amendments which were approved by the Financial Services Board and the SA Revenue Services; and lastly, may have required section 14 transfer certificates which were approved by the Financial Services Board.

In theory, the improper use of a surplus at that time can now be offset against any surplus which will now be allocated to the employer. Several employers are of the opinion that this will be of little value since the provisions of the Bill will, according to them, only allocate a small portion of the surplus to this category and once this surplus has been absorbed the company itself may be litigated against in its personal capacity. I believe that it is important for the Minister to clarify these perceptions and thereby set employers’ minds at rest.

The repayment of pensions to previous employees should be restricted only to the allocated surplus for this category, and protection against further claims against the fund or employer should be guaranteed. In this regard the IFP, of course, only considers employers who have indeed acted according to the rules and, in terms of the previous dispensation, strictly according to what they should have done.

Hopefully, the distribution of the surplus will lead to higher levels of domestic investment and savings, but additional consumer spending could be expected at the very least. This should provide some impetus and momentum to the economy. We fully realise that this legislation put forward a compromise, and therefore both employers and employees will not be 100% satisfied. Furthermore, we believe that this legislation, under the circumstances, is the best possible which there would be. With these cautionary remarks, and a request for improved communication with role-players, the IFP will support the legislation. [Applause.]

Prof B TUROK: Mr Chairperson, as I was coming into the …

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Are you rising on a point of order regarding the fraternal greetings? [Laughter.]

Prof B TUROK: I hope the timing has not started yet, because I have a lot to say. And Ken Andrew will be educated in the process.

As I came into the hall today, somebody said to me: ``As you are dealing with pensions, I have a small suggestion - a small amendment to this Bill to allow for a pension for the hon Tony Leon and the hon Van Schalkwyk would get rid of a major problem that we have at the moment. This would be conflict resolution by Parliament.’’ So, although I cannot formerly move it, I do want to suggest that the Minister may find a way of doing something about that.

Listening to the debate this afternoon, one is absolutely surprised at the tame legislation - as it appears - that we are bringing before the House. Whereas, in fact, in the committee there was enormous heat, so many meetings, so many documents placed before us and so much controversy, one is a little bit surprised as to why in the House itself today we seem to be dealing with something rather insignificant, whereas in fact the Bill represented a major battle. And I ask myself, why? It seems that the answer lies in the question of history. I think that this Bill reveals something about the history of South Africa which people are perhaps missing in this debate.

The ANC is often charged with complaining too much about history, but I think that this Bill reveals that that complaint is often - and particularly in this case - fully justified.

Clause 15(b)(3) of the Bill states that any pension fund must take into account the financial history before distributing a surplus. Why is it that the Bill should specify that history is so important when it comes to apportioning a surplus which may be there? The answer is that it reveals past inequities and requires a certain historical imagination on our part to understand what that history is. It is hidden somehow in the clauses of the Bill itself, and I am going to try, very briefly, to bring it out.

I should bring it out by making a comparison between people who brought evidence to the committee, namely the Financial Services Board on behalf of Government, business and labour, and this led to a distillation of opinion in the committee which somehow was able to rise above those contending views and really dig into the history and find out what history will tell us about this particular controversy.

The Financial Services Board raised the question: How did this R80 billion arise? By the way, let me say that I am absolutely flummoxed that an amount of R80 billion, which is apparently lying around somewhere, is regarded with a certain casualness in this Bill. Eighty billion rand is a vast amount of money, and that is why there was heat from labour and business who all wanted a share of the pie. I think Parliament must understand that there was a battle around this issue.

The committee was told that the funds in the past - going into history - were run by employers. Senior employers were executives on the boards; trustees were appointed by the employer and, we were told, labour people were sometimes bribed by employers on the executive of these funds. There was little differentiation between the board and the employer; the fund and the employer, and there was insufficient disclosure to members.

A vital element of the fund, as people have pointed out, was the transfer from defined benefits to defined contributions, which meant that executives were raiding the funds. Surpluses were used improperly, there were higher benefits for executives than for ordinary members, and so on, showing that in the history of South African pension funds administration, there is a gross inequality in the way that things were handled.

Business South Africa then came to us and said that the employer owns the surplus. They also said that payments in the past were made in line with approved practice under a system in which workers and employers were part of a highly inequitable system in which employers manipulated the fund. They also said that payments were paid in line with the practices of the time. I am saying that history tells us that the approved practices of the time were totally inequitable and unjust, and that is why our committee had to battle with this issue of how we could correct that history.

We were told that the surplus was due to actuarial conservatism. This is a nice euphemism for what was going on in some of these funds - and I am not saying in all of them, but in some of them. Certainly, the evidence that was brought to us was that there was manipulation of a high order in certain funds and it is the job of Parliament and the finance committee in so many months to try and get to the root of this historical injustice.

What surprised us a little was that the actuarial society, through the president no less, in a document to us, said that it is not practical to impose a new basis for past transactions. Surpluses should only go to current employees. They said - and I am talking about history now - that past actions were in good faith and in line with accepted practices, and that the proposals in the Bill are unfair. I would appeal to the House to give cognisance of the fact that these actuaries who were supposed to be objective and neutral were in fact taking the side of the employer in saying that past practices were reasonable and fair and that the proposals in the Bill were unfair.

Labour on the other hand said that in the 1990s there was no regulation in the industry, there were no worker representatives in the defined benefit funds, workers were not informed; unions went on strike, there was no information, the employers encouraged movement from defined benefits to defined contributions and so on. Furthermore, investment reserves had been stripped and they said that the funds are for beneficiaries and not for employers.

The committee then had to display the wisdom of Solomon and see where it should go. Our conclusion was that it was broadly understood that the role of Parliament is to stand for the public interest. We stand neither for the employers nor the employees. We simply stand for the public interest, which meant equity for all, taking account of our history.

We took the decisions that have been outlined to this House by the Minister and the hon Hogan, namely that the money belongs to the fund and that distribution must be done on the basis of equity; that history is important; and that any legislation which comes before the House must be seen in a historic context. [Applause.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Hon member, you still have eight seconds to go but you are finished. [Laughter.]

Dr P J RABIE: Chairperson, hon Minister and hon members … [Interjections.] No, I did everything myself!

The Pension Funds Second Amendment Bill deals in particular with the distribution of surplus funds in pension funds, and future minimum benefits for members. This is a very complex and technical Bill and can be categorised as a fair piece of legislation because it allows the respective stakeholders to participate with regards to the distribution of surplus funds.

Two basic concepts are extremely important if this particular piece of legislation is evaluated, namely the distinction which is made between defined benefit funds on the hand and contribution pension funds on the other. A very simple example of a defined benefit fund is where a member is guaranteed a certain benefit at retirememt. A set formula that relates to years of service and the final salary are two key variables in determining the final pension benefit. A defined contribution pension fund has to a large extent been replaced by a direct benefit pension fund and it basically means that the employer and the employee contribute an agreed proportions of the employees salary, and the pension available at retirement depends on the months contributed plus investment growth.

The Bill also clarifies who is entitled to the available surplus money. Two conflicting views emerged at the public hearings, namely that labour was of the opinion that the pension fund is an independent legal entity and not an extension of the employer, therefore all the money, including surpluses, belongs to the members and former members of the pension fund. However, business stressed the point that the employer is responsible for a deficit and contributes a substantial amount of money, and is therefore entitled to the financial surplus. That is one of the positive factors about this Bill in that both these two components are actively involved and are taken care of.

It is estimated that the surplus funds vary from anything between R80 million and R200 million. At present there is a fair degree of controversy regarding how pension funds were administered in the past. Some of them ended up in the Appeal Court in Bloemfontein recently regarding this particular factor. Basically, pension funds which have surpluses furnished a number of reasons as to what gave rise to their surpluses, and some reasons are alarming.

Firstly, poor benefits were paid to employees who resigned or were retrenched. Secondly, the low cost-of-living increases granted to pensioners who were already struggling to make ends meet on their present pensions was another reason that was given. What is of particular concern is that it was mentioned at the public hearings that a number of pension funds deliberately transferred unreasonably low amounts from direct benefit pension funds to direct contribution funds, something which appears to have occurred fairly regularly in the 1980s and the early 1990s. This is clearly not acceptable, and this piece of legislation will fill the shortcomings in the present legislation. [Interjections.]

Later, wanneer ek my toespraak voltooi het, sal ek die agb lid hieroor antwoord. [Later, when I have finished my speech, I will answer the hon member about this.]

I will come to that member later as well, because I did not hear anything. This Bill can be defined as an honest attempt to act as a compromise between all respective interest groups.

In the 1980s and 1990s employers and trade unions encouraged their members to extensively restructure their assets and liabilities from a defined benefit fund to a defined contribution fund on the basis designed by actuaries and consultants acting on behalf of employers, who often calculated transfer arrangements in an inequitable manner and also failed to give reasonable benefits and rights to members.

It is my belief that this piece of legislation will address some of the injustices of the past and will result in a more equitable distribution of assets to members of pension funds. The DA supports this piece of legislation.

Dr G W KOORNHOF: Chairperson and hon members, the Bill before us has a long history of negotiations. The first draft Bill was withdrawn in 1998, based on objections voiced by organised labour. In subsequent discussions no consensus or solutions could be reached between labour and business in Nedlac. This Bill is therefore a compromise attempt by Government. Ironically, neither business nor labour is fully satisfied with the product as it stands.

This situation is a litigator’s dream and a portion of the value of the surplus to be apportioned will without doubt be spent on lawyers’ fees in the future. It is disturbing and cause for concern that the full economic and fiscal impacts of such an important Bill on our economy have not been researched and established.

It is indeed possible that this Bill may have severe and potentially detrimental implications for the South African economy. As a matter of fact, the National Treasury has referred to the following risks involved in this process in their presentation to the Portfolio Committee on Finance: firstly, a possible negative market impact and, secondly, an extended negative effect on equity.

Many unanswered questions remain around the implementation of this Bill. What strain will be put on the retirement industry? What effect will this Bill have on some listed shares on the Johannesburg Securities Exchange? What effect will penal retrospective legislation have on investor confidence? How will companies which are not in a position to repay money and are suddenly burdened with a huge debt, react in terms of a possible liquidation, downsizing, possible job loses and reduced profitability? Will employees be effectively traced and fully compensated for what is due to them in terms of this Bill?

We fully support the principle that provision should be made for the apportionment of actuarial surpluses and to address the historical improper use of surpluses by some employers, to the detriment of pension fund members. The uncertainty surrounding the possible negative effects of this Bill in its current form on the economy and on the financial market poses a serious problem. It is important that the economic and financial impact of this Bill is determined and quantified in the interest of both employees and employers.

The UDM has hereby noted its concerns in respect of the Bill and expresses the hope that all role-players will act in such a way that the apportionment of the surpluses will be done in a manner that will not negatively affect our economy and financial markets. I trust that this will be the objective of both employers and employee when the apportionment of the surpluses is being negotiated. Mr L M GREEN: Chairperson, hon Minister and members, this Bill paves the way for equitable benefits where historically pension payouts lacked legislative security in this regard. Whatever surplus is accrued by the fund, negotiated arrangements will determine the minimum levels of contributions that will be allowed for. This form of equitable or fair value calculation automatically raises the standards and norms of the pension fund industry. The challenge this Bill offers to pension funds is clause 15(b)4, which deals with redressing past unfair calculations of the pension surplus. A legal imperative will be placed upon the pension fund industry to re-examine and redress its historical payout schemes.

Inasmuch as this clause is laudable and an acceptable provision, we must ensure that reasonable certainty exists that historical redress is feasible. Actuarial research into historical data will be costly and will probably be a lengthy process. The retrieval of historical data as well as the economic assessment of such data may not yield the desired outcomes this Bill hopes to achieve. What is preferably needed is to introduce a formula upon which equitable surplus averages can be calculated against a historically acceptable rate.

We support the view that all past and present members of a pension fund should benefit from any surpluses created by the fund. The Government and the pension fund industry can define a formula upon which such averages can be calculated in order to avoid the possible problems clause 15(b)4 may cause.

The ACDP supports this Bill, because we believe it is a sincere attempt to address the injustices of the past. It also attempts to equitably distribute the surplus to both employees and employers.

Mr M N NENE: Chairperson and hon members, the pension surplus we are discussing today accrued some time in the past, during the apartheid era. This is how insensitive this system was to the vulnerable. The majority of the victims were undoubtedly the poor and mostly black. As we have heard from previous speakers on how this surplus accrued, it is clear that as Parliament we had to put in place a system through which this injustice could be addressed.

This Bill, amongst others, makes new provisions for the apportionment of actuarial surpluses and the minimum benefits to be set. The people shall share in the country’s wealth. This is what the ANC’s Freedom Charter states and this is what we envisaged in 1955 when the people’s charter was drawn up. While the minimum benefits are set to ensure that what happened in the past is not repeated, the apportionment of the surpluses ensures that they are distributed equitably among stakeholders. Why do we say stakeholders? It is because the ANC Government, as much as it was concerned with members’ plight, could not address these concerns to the detriment of business. This then gave birth to the stakeholder concept. It means former members and the employer.

As a committee, we were faced with a very complex and difficult situation of extremely divergent views between labour and business. These are both major players in our economy. The apportionment of the existing surplus will take place under very stringent conditions. The board will submit to the registrar a scheme for the proposed apportionment of the surplus after all the stipulated conditions have been satisfied. Since the entire actuarial surplus belongs to the fund as ruled in the Tek court case, no party has a right to repatriate the surplus. Two very important reserve accounts are established to facilitate the apportionment process. The first is the employer surplus account and the second the member surplus account.

Section 15B provides for a process to ensure that the trustees and members give their informed consent in apportioning the surplus. At least 75% of the board must approve the distribution, and the board is made up of a 50/50 representation between employees and employers. Members must have adequate information on time - which is approximately four weeks - to consider the distribution and it must be endorsed by an actuary that it is equitable. The registrar has the right to require an independent actuary to review the distribution. Lastly, the registrar must be satisfied that the process has been followed correctly and that distribution is reasonable and equitable.

I do not want to bore this House with details but perhaps it would be appropriate to outline how the stakeholders will be allowed to use the surplus. The use is for members and former members and will be as follows. This surplus can only be used for the improvement of current benefits and those previously paid to former members. It can also be used to reduce current contributions, which is equivalent to a contribution holiday. It can also be used to meet expenses which would otherwise reduce the proportion of the members’ contributions that are invested for retirement.

On the employer’s side it can only be used for the improvement of benefits, for meeting the expenses which the employer is obliged to pay in terms of the fund and also to avoid imminent job loses and the transfer of the surplus from one fund to another. It can also be used for funding contribution holidays.

Other issues are the minimum benefit, which has already been covered by our hon chairperson. These are the minimum pension increase, individual account, contribution accumulation and individual reserve. The pension increases, to mention but a few, are specified to be at a lower rate than the fund can afford to give on the basis of its investment returns earned, less the cost of pension increases granted and the change of CPI from the date of retirement. This will ensure reasonable pension increases for pensioners.

The introduction of the concept of minimum benefits to be paid in the future is aimed at removing possible abuses perceived in the past in connection with the transfers and convergent values. Convergent values, retrenchment benefits, pension increases and interest rates are payable on a refund of contributions. The people shall share in the country’s wealth. These noble words, enshrined in the Freedom Charter 46 years ago, are still true today and will continue to be true. The ANC supports the Bill.

Dr C P MULDER: Voorsitter, ek dink die agb lid Nene vat die saak ‘n klein bietjie ver om met hierdie kwessie by die Vryheidsmanifes te gaan draai. Dit is nie regtig noodsaaklik nie. Die toets is doodeenvoudig: As daar politiek agter hierdie ding was, sou daar sekerlik vandag ‘n surplus gewees het en het die mense wat met die geld te doene gehad het, dit waarskynlik onder hulle pelle versprei. Feit van die saak is: Daar is min dinge so tragies en hartseer as om iemand op sy oudag te sien wat nie behoorlik vir sy aftrede voorsiening gemaak het nie. So ‘n persoon word gestroop van sy waardigheid en word dikwels gedwing om terug te val op die hulp en ondersteuning van familie, vriende en kinders of op die staat vir versorging.

Maar dis eenvoudig nie moontlik vir die staat om deur middel van staatspensioene die al groterwordende behoefte vir die versorging van afgetredenes te sorg nie. Juis daarom is dit so belangrik dat daar privaat pensioenfondse bestaan en dat mense aangemoedig word om selfs tydens hul aktiewe werkloopbaan vir hulself te beplan en daarby aan te sluit en voorsiening te maak. Sodoende kan mense vir hulself baie hartseer op hul oudag spaar.

Die VF sal alle wetgewende maatreëls wat die saak van private pensioenfondse verbeter, steun. Ons dink dit is absoluut noodsaaklik. Die VF verwelkom daarom veral die bepalings in artikels 14A en 14B van die wysigingswetsontwerp, om voorsiening te maak vir ‘n minimum voordeel vir lede van pensioenfondse. Hoe beter die voordele vir ‘n lid is, hoe meer sal ons dit ondersteun. Die probleem egter is dat dit inflasie is wat maak dat mense wat vandag aftree, nie hulle pensioen kan gebruik nie. Binne ‘n kort tydjie vind hulle dat die pensioen net nie meer voldoende is nie. Daar word nie verniet gesê: (Translation of Afrikaans paragraphs follows.)

[Dr C P MULDER: Chairperson, I think the hon member Nene is taking the issue a bit far by referring to the Freedom Charter on this issue. That is not really essential. The test is very simple: If politics was behind this thing, today there would certainly have been a surplus and the people who dealt with the money would probably have distributed it among their friends. The fact of the matter is: There are few things as tragic and sad as seeing someone in their old age who has not made adequate provision for their retirement. Such a person is stripped of their dignity and is often forced to fall back on the assistance and support of family, friends and children, or on the state for care.

However, it simply is not possible for the state, by way of government pensions, to meet the ever-increasing need for the care of those who have retired. Precisely for that reason it is so important that private pension funds exist and that people are encouraged to plan for themselves during their active careers and to join such pension funds and make provision. In this way people can save themselves a great deal of unhappiness in their old age. The FF will support all legislative measures which improve the cause of private pension funds. We think they are absolutely essential. For this reason the FF particularly welcomes the provisions in clause sections 14A and 14B of the amending Bill, to make provision for a minimum benefit for members of pension funds. The better the benefit for a member, the more we will support it. However, the problem is that it is inflation which causes people who retire today to be unable to use their pension. Very soon they find that the pension is no longer sufficient. Not for nothing is the following said:]

Inflation is like this: two years ago if one retired, one was given a gold watch. Last year if one retired, one was given a silver watch. Now if one retires, one is given fifty cents and a number to dial for the time.

Feit van die saak is, die VF sal graag die wetsontwerp ondersteun. Ons glo dat in terme van hoe die wet voorstel dat die surplusse hanteer word, dit in almal se belang sal wees wat hierby betrokke is. Ons is bly dat daar ‘n kompromie gevind kan word en ondersteun graag die wetsontwerp. (Translation of Afrikaans paragraph follows.)

[The fact of the matter is, the FF will gladly support the Bill. With regard to how the Act proposes that surpluses be dealt with, we believe it will be in the interests of everyone involved. We are glad that a compromise could be found and gladly support the Bill.]

Mr I S MFUNDISI: Chairperson, hon members, when people invest their labour, time and energy in any job, they look forward to a reward when times of need come.

Pensions are put in place to allow those fortunate ones with jobs to feather their nests in preparation for a rainy day such as disability or old age. This Bill seeks to do just that. The Bill introduces new concepts such as deferred pensioner'' which is defined asa member who has not yet retired but has left the service of the employer concerned, prior to normal retirement date leaving in the fund the members rights to such benefits as may be defined in the rules’’.

The introduction of such beneficiaries makes sure that employees will no longer forfeit their benefits because they did not serve up to retirement age. The introduction of a clause that makes it imperative for any pension fund board to establish and implement a policy with regard to increases to be granted to pensioners and deferred pensioners is most welcome. The Bill takes into account that increases have to be made to offset price inflation and consumer price indexes. Sections 15A to 15K are being inserted into the existing Act, among other things, to ensure that members of the fund are not disadvantaged, and to put it beyond doubt that any credit balance in the members’ surplus account is used for the benefit of members. Former members of funds will also be represented by appointed persons, so that their voices can be heard on an ongoing basis. The proposals and intentions of the board of the fund will be made known to such former members through such appointees. The new insertions, particularly section 15D, spell out clearly that, should the board decide to utilise surplus funds, it should only be, amongst others, to improve the benefits paid to the members and former members, so that members’ and former members’ quality of life can improve; and to reduce the current contributions due from members so that they may have spending money.

The Bill seeks ways and means in which people who have invested their labour in some companies or institutions do not end up worse off. The UCDP supports the Bill.

Dr S E M PHEKO: Chairperson, the PAC rises to support the Pension Funds Second Amendment Bill. Its purpose is to amend the Pension Funds Act of

1. This Act is 45 years old.

This Bill is aimed at making provision for the apportionment of actuarial surpluses for minimum benefits, and to provide for matters connected therewith. Clause 1 defines actuarial surplus'' in relation to a fund which is subject to actuarial evaluation,as the difference between the value that the valuator has placed on the assets of the fund less any audit balances in the surplus accounts and the value that the valuator has placed on the liabilities of the fund . together with the value of those contingency reserve accounts which are established or which the board deems prudent to establish on the advice of the valuator’’.

A deferred pensioner'' is defined asa member who has not yet retired but has left the service of the employer concerned prior to normal retirement date … ‘’ The employer'' in relation to a fund, is defined asan employer participating in the fund’’. These definitions and many others in this Bill are helpful in the interpretation of law in the event that there is a dispute.

Clause 3 of the Bill provides for a number of minimum benefits for a member. The Bill provides minimum levels of pension increases and minimum levels of interest added to member contributions in respect of any leavers. This will prevent the degeneration, in future, of a surplus as a result of the inequitable treatment of members leaving the fund and receiving pension increases.

The Bill seems to be a fair compromise, as the interest groups which negotiated it could not achieve consensus. Their positions were far apart on several major issues. The PAC supports this Bill.

Miss S RAJBALLY: Chairperson, the MF notes that at the closure of 1999, the South African private retirement fund had a surplus concentrated within the defined benefit funds of approximately R80 billion. Having viewed the sources of this surplus, it is felt that the redistribution of the surplus is necessary and correct. The Bill advocates an equitable redistribution between all parties concerned.

The MF compliments the department on the provisions made for a set procedure to culminate in the redistribution of the surplus proceeds. The redress of the past inequitable benefit payments from the funds that have a surplus will certainly have a positive impact and is applauded.

We should ensure that our workforce is given what they are entitled to. All these corrections are welcomed. Each and every being, if spared, is destined for old age, and pension funds are a major part of welfare provision for the elderly. Bearing this in mind and our undertaking in the Constitution, it is our duty to ensure that what is due is made available, correctly and efficiently. It is sincerely felt that this Bill assists us in this process and, if instituted correctly and efficiently, it will bring the rewards and results intended.

The MF supports the Pension Funds Amendment Bill. [Applause.]

Mnr C AUCAMP: Mnr die Voorsitter, hierdie wetsontwerp hanteer ‘n situasie waarvan sowel dominees as politici nie juis veel ondervinding het nie, naamlik surplusfondse. In wese is dit dus ‘n lekker probleem. Iewers is daar iets wat nie klop nie. Pensioenfondse sit met surplusfondse van meer as R80 miljard. Terselfdertyd is daar talle pensioentrekkers wat veral in die armer tye met pensioen gegaan het, wat kwalik ‘n bestaan kan voer. Ons kry hulle veral in ons ouetehuise. Dit is mense wat lewenslange diens gelewer het of hul eggenotes, maar dan met die tyd en inflasie eenvoudig net nie meer punte bymekaar kan kry nie. Ons verwelkom die wetgewing sodat dit ‘n beter bedeling, veral vir ons bejaardes kan skep. Veral verwelkom ons die prioriteit wat voormalige werknemers geniet by die uitdeel van fondse, sodat hulle pensioene eerste op ‘n hoër vlak gebring kan word.

Daar is ‘n groot diskrepansie tussen pensioentrekkers wat byvoorbeeld in die tagtigerjare afgetree het en die van vandag. Ek wil twee belangrike sake onderstreep. Eerstens, ons vind hierdie bejaardes onder die broodlyn baie keer onder voormalige staatsamptenare. Wat is die posisie met betrekking tot die staat se pensioenfondse en oorskotte? Kan die Minister ons daarop ‘n antwoord gee? Kan ons soiets ook daar verwag? Tweedens, die onus rus op pensioentrekkers om in antwoord op advertensies te reageer ten einde hul voordele te ontvang. Baie van hierdie mense het nie redelike toegang tot koerante en ander media nie. Ons wil voorstel dat ‘n spesiale projek geloods word deur gebruik te maak van kerke, welsynsorganisasies en ouetehuise om hierdie mense se nuwe regte onder hul aandag te bring, sodat hulle daarop kan aanspraak maak.

Hierdie wetgewing lê my na aan die hart. In die bediening het ek eerstehands kennis gemaak met mense wat veral op hul oudag moet sukkel. Persoonlik is dit onmoontlik vir my wat nie op die portefeuljekomitee dien nie, om op die hoogs tegniese punte kommentaar te lewer. Ons ondersteun hierdie wetgewing. Ons mag nie toelaat dat fondse ophoop, terwyl hulle wat oor die jare alles gegee het, onder die broodlyn leef nie. Ons wens die Minister en sy departement alle sterkte toe met die implementering van hierdie baie ingewikkelde saak. (Translation of Afrikaans speech follows.)

[Mr C AUCAMP: Mr Chairperson, this Bill deals with a situation of which both ministers of religion and politicians do not have much experience, namely surplus funds. In essence it is therefore quite a tricky problem. Somewhere there is something that does not add up. Pension funds have surplus funds in excess of R80 billion. At the same time there are many pensioners who went on pension in poorer times who can hardly survive. We encounter them in our old age homes in particular. These are people who worked all their lives, or their spouses, but who can, with time and inflation, no longer make ends meet. We welcome the legislation so that a better dispensation could be created, especially for our elderly. We welcome in particular the priority that former employees enjoy at the distribution of funds so that their pensions could be brought up to a higher level.

There is a large discrepancy between pensioners who retired in the eighties, for example, and those of today. I want to emphasise two important matters. Firstly, we find that these elderly people who live below the breadline are often former public servants. What is the position in respect of the state pension funds and surpluses? Could the Minister give us an answer in this regard? Could we expect something like this in that area? Secondly, the onus rests on pensioners to react to advertisements so as to receive their benefits. Many of these people do not have ready access to newspapers and other media. We want to suggest that a special project should be launched, using churches, welfare organisations and old age homes to bring the new rights of these people to their attention, so that they could claim them.

This legislation is dear to me. In the ministry of religion I personally met people who have to struggle in their old age. It is impossible for me, who does not serve on the portfolio committee, to comment on the highly technical points. We support this legislation. We may not allow funds to build up while they who have given their all throughout the years live below the breadline. We wish the Minister and his department everything of the best with the implementation of this very complicated matter.] Mr B A MNGUNI: Mr Chairperson, this Bill is addressing a history that was plagued by deceit and mistrust between labour and employers. The ignorant and the powerless at the time, who had no say on the conditions under which they were employed, saw their hard-earned remuneration packages slashed in half when they resigned from their places of employment or when they were dismissed. This Bill is trying to rectify that.

Clause 15K on specialist tribunals states that a dispute that may exist will be resolved by the board. The board will try by all means to ensure that labour and employers negotiate a proper settlement. Should that fail, both parties can resort to an arbitrator who will be appointed by the Pension Fund Adjudicator. If both parties are still not satisfied they can go for a special tribunal. They notify the registrar and the special tribunal will actually be constituted by at least three specialists, one of whom must be an actuary, one a lawyer and anyone who is experienced in pension or retirement funds. As these panelists will be appointed by both stakeholders, that will ensure that the special tribunal has credibility and everybody can trust it. Moreover, it will be independent of any of the stakeholders.

The remaining question is: How will a retrenched mineworker or an old pensioner have confidence in the specialist tribunal? As already said, the board itself is constituted by members, former members and employers. So in the instance of a concerned poor mineworker down in the Free State in Qwaqwa, or down in the Southern Free State around Koffiefontein, who is retrenched from the diamond fields, this Bill will make sure that he has representation on the board. The board will elect or nominate a panelist who will sit when deliberations about the surplus are done. That is how credibility will be created around this special tribunal. However, should any of the parties still have a concern about the special tribunal or the determination of the specialist tribunal, he can go to the court of law. The specialist tribunal’s determination, however, will be final and binding except on the registrar.

Most of the time I usually like to say that the opposition should be given an opportunity to make right what they did wrong in the past. I am referring to the members of the opposition who were serving in the previous government under the apartheid regime. It is no wonder that they support this Bill because it cuts across colour lines. It matters not whether one was white or black, when one resigned the salary was cut in half because the employer would withdraw his or her contributions. [Interjections.] I wonder how the hon member Mr Bekker, as one who supports the employers, would feel if he had a surplus that was equal to that of the employer when he resigns so that he can give it to the Government to make a better life for other people.

The Bill goes further than making a better life for other people or for the poor. From an economic point of view the Bill allows every member or individual, who has the potential to go further in life or who has the potential with regard to his profession, to deliver as his capacity allows him or her to, because that person will be able to move from one job to another without fearing that his or her pension will be cut. In that way it encourages labour flexibility, which is a necessary part of a stable economy that attracts investment and makes a better life for our people.

Lastly, I would like to congratulate the Minister on pushing through this Bill so that the thousands of mineworkers who left their employment during those times of retrenchments in the 1980s, who had no voice that represented them in those mines and who were forced - under the closed-shop agreement - to belong to labour organisations that did not represent them, at least to get a fair share of the pensions that were unscrupulously taken away from them by the employers. [Applause.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! In order to comfort both the last speaker and the Minister, the Chair is an office: it is neither male nor female, except perhaps for the French grammar.

The MINISTER OF FINANCE: Mr Chairperson, let me start by expressing my appreciation to all the parties, because I think the broad support that this Bill received is indicative of not only the amount of due care and attention that members have given, but also the general maturity. There were moments in the debate when both sides had argued so strongly that it could have gone either way, and I would really like to express my appreciation for that.

Let me deal with the few concerns that were raised: In respect of the issues raised by the hon Mr Andrew, I think the first point to recognise is that legislation and regulation clearly need to keep up with an industry where the rate of exchange is fastest. So with regard to issues relating to a single regulator, going forward it is going to be important to deal with it. I share his outrage on what the Financial Services Board had said about losing records. It is completely unacceptable.

I will come back to the Public Service pension funds in a moment, to tidy up what the hon Aucamp has raised. We are talking about surplus today, but the one reality that I think we all must try to understand and engage with, is that many funds, especially defined contribution funds, are losing money hand over fist. A newspaper this past weekend published a table of funds that are invested offshore. These funds are largely pension funds. About 50% of them are performing more poorly than even the exchange rate of rental between the US dollar and the rand. That is exceedingly worrisome. So whilst we may be talking about R80 billion in surpluses, the reality, in respect of investment decisions that were taken where fund managers can walk away, is that there is no responsibility for dealing with it.

The other issues before the committee, in relation to the Financial Advisory and Intermediary Services Bill, FIAS, become exceedingly important. But, as we said earlier, the key issue - and this arises across the board from the concerns raised by all parties - is that we cannot leave pensioners or members of pension funds or trustees without the necessary education. The power relations in respect of decisions about investment are too big to just leave people to their own devices. In concluding this debate, my appeal is that we should all take an interest in this matter as part of our constituency or past through work, to ensure that people are equipped, and are able to ask the appropriate questions, and not try to get at people with abusive jargon.

The issue I am concerned about today in dealing with the surpluses is, perhaps, the loses accumulating in these funds right now. And I think that is what is perhaps more important than the issues that the hon Dr Koornhof raises, because I do not see a huge outflow of finances in the short-term out of the funds. I mean in the way in which we have handled it, there is no risk of negative equity resulting from this.

I think the key issue is the battle for ethical considerations. That has very much been the centrepiece of what has constructed this broad consensus that we have here this afternoon. The ethical considerations about who owns what. And I think if that continues to guide us and if we recognise that even trustees in the technical committee can be confused by issues they do not understand, then we recognise that it is not just the legislation. It is about the care and support that we can provide to people who often feel that some of these issues are not what they immediately understand.

Let me just touch on the Public Service pension fund. The first point to make in respect of what Dominee Aucamp raises is that there is not a surplus in the country. In respect of the issues of law, we have a pension fund law passed through because it was tied in to the old Public Service Act, negotiated in the central bargaining chamber and, because of the way in which that law was styled, the agreement on establishing the pension fund then had the force of legislation approved by Parliament.

In terms of that legislation there are meant to be 12 trustees. This was passed through, I think, in about March 1996. This comprised twelve trustees, that is six employers and six employees. Every time we try and negotiate because the unions cannot present us with six trustees, because the risk of the Minister of Finance being the sole trustee goes against the entire spirit of everything we are discussing. If one accepts as a given that the pension fund does not belong to the employer, then the fact that I serve as the sole trustee is wrong.

I would like to assure hon members, including the hon Andrew, that this issue has been on the agenda of the Public Service central bargaining chamber year after year, because it is not a responsibility we want, and it is a failure on the part of the unions to resolve this issue, and for that reason, as members know, I have stepped back from the Public Investment Commission as I have nothing to do with it, because it would create a conflict. But, certainly, we want the Public Service or the Government’s employees’ pension fund to be in exactly the same position. It is still a defined benefit fund, and the issues here relate primarily to the way we have had to change from defined benefits to defined contributions. Unlike us, the public office bearers, we have a defined contribution fund, and I know that members are concerned. But, there is a board of trustees, and we know the board is …

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Hon Minister, your time has expired.

The MINISTER: Chairperson, I trust that I was able to respond to the concerns raised. Let us keep the discussions alive. We must try to do that, because they affect us and, more importantly, we have a responsibility to people out there who would be affected by pension funds. [Applause.]

Debate concluded.

Bill read a second time.

               STOCK EXCHANGES CONTROL AMENDMENT BILL

                       (Second Reading debate)

Order disposed of without debate. Bill read a second time.

REPORT BY MINISTER OF FOREIGN AFFAIRS ON WORLD CONFERENCE AGAINST RACISM

                      (Subject for Discussion)

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! As the Minister of Foreign Affairs is not available today, this item will stand over. The Whips have been advised of this arrangement.

The House adjourned at 16:46. ____

            ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS

                       FRIDAY, 12 OCTOBER 2001

ANNOUNCEMENTS:

National Assembly and National Council of Provinces:

1 The Speaker and the Chairperson:

 (1)    The Joint Tagging Mechanism (JTM) on 12 October 2001 in terms of
     Joint Rule 160(3), classified the following Bill as a section 75
     Bill:


     (i)     Medical Schemes Amendment Bill [B 80 - 2001] (National
          Assembly - sec 75).


 (2)    The Minister of Trade and Industry on 9 October 2001 submitted a
     draft of the Lotteries Amendment Bill, 2001, as well as the
     memorandum explaining the objects of the proposed legislation, to
     the Speaker and the Chairperson in terms of Joint Rule 159. The
     draft has been referred to the Portfolio Committee on Trade and
     Industry and the Select Committee on Economic Affairs by the
     Speaker and the Chairperson, respectively, in accordance with
     Joint Rule 159(2).


 (3)    The Minister of Health submitted the Molaokakanywa wa Ditirelo
     tsa Laporatori ya tsa Maphelo ya Bosetshaba [M 56 - 2001]
     (National Council of Provinces - sec 76) to the Speaker and the
     Chairperson on 10 October 2001. This is the official translation
     of the National Health Laboratory Service Amendment Bill [B 56 -
     2001] (National Council of Provinces - sec 76), which was
     introduced in the National Council of Provinces by the Select
     Committee on Social Services at the request of the Minister of
     Health on 30 August 2001.

TABLINGS:

National Assembly and National Council of Provinces:

Papers:

1. The Minister for Justice and Constitutional Development: Third Interim Report of the South African Law Commission on Simplification of Criminal Procedure (The right of the Director of Public Prosecutions to appeal on question of fact), Project 73 [RP 58- 2001].

COMMITTEE REPORTS:

National Assembly:

1. Report of the Portfolio Committee on Foreign Affairs on the Diplomatic Immunities and Privileges Amendment Bill [B 40 - 2001] (National Assembly - sec 75), dated 3 October 2001:

   The Portfolio Committee on Foreign Affairs, having considered the subject of the Diplomatic Immunities and Privileges Amendment Bill [B 40 - 2001] (National Assembly - sec 75), referred to it and classified by the Joint Tagging Mechanism as a section 75 Bill, reports the Diplomatic Immunities and Privileges Bill [B 40B - 2001] (National Assembly - sec 75).

2. Report of the Portfolio Committee on Arts, Culture, Science and Technology on the “Woordeboek van die Afrikaanse Taal” Act Repeal Bill [B 30 - 2001] (National Assembly - sec 75), dated 10 October 2001:

   The Portfolio Committee on Arts, Culture, Science and Technology, having considered the subject of the “Woordeboek van die Afrikaanse Taal” Act Repeal Bill [B 30 - 2001] (National Assembly

   • sec 75), referred to it and classified by the Joint Tagging Mechanism as a section 75 Bill, reports the Bill with an amendment [B 30A - 2001].

3. Report of the Portfolio Committee on Arts, Culture, Science and Technology on the Academy of Science of South Africa Bill [B 67 - 2001] (National Assembly - sec 75), dated 10 October 2001: The Portfolio Committee on Arts, Culture, Science and Technology, having considered the subject of the Academy of Science of South Africa Bill [B 67 - 2001] (National Assembly - sec 75), referred to it and classified by the Joint Tagging Mechanism as a section 75 Bill, reports the Bill with amendments [B 67A - 2001].

4. Report of the Portfolio Committee on Arts, Culture, Science and Technology on the Africa Institute of South Africa Bill [B 47 - 2001] (National Assembly - sec 75), dated 12 October 2001:

   The Portfolio Committee on Arts, Culture, Science and Technology, having considered the subject of the Africa Institute of South Africa Bill [B 47 - 2001] (National Assembly - sec 75), referred to it and classified by the Joint Tagging Mechanism as a section 75 Bill, reports the Bill with amendments [B 47A - 2001].

                    MONDAY, 15 OCTOBER 2001
   

ANNOUNCEMENTS:

National Assembly and National Council of Provinces:

1. The Speaker and the Chairperson:

 (1)    The Minister of Finance submitted the Wysigingswetsontwerp op
     Beheer van Aandelebeurse [W 75 - 2001] (National Assembly - sec
     75) to the Speaker and the Chairperson on 15 October 2001. This is
     the official translation of the Stock Exchanges Control Amendment
     Bill [B 75 - 2001] (National Assembly - sec 75), which was
     introduced in the National Assembly by the Minister on 21
     September 2001.

National Assembly:

1. The Speaker:

 The following papers have been tabled and are now referred to the
 relevant committees as mentioned below:


 (1)    The following paper is referred to the Standing Committee on
     Public Accounts for consideration and report and to the Portfolio
     Committee on Communication for information:


     Report of the Auditor-General on the Financial Statements of the
     South African Telecommunications Regulatory Authority for 1 April
     2000 to 30 June 2000 [RP 109-2001].


 (2)    The following papers are referred to the Standing Committee on
     Public Accounts for consideration and report and to the Portfolio
     Committee on Education for information:


     (a)     Report of the Auditor-General on the Financial Statements
          of the Foundation for Education, Science and Technology for
          1999-2000 [RP 116-2001].


     (b)     Report of the Auditor-General on the Financial Statements
          of the High School Vorentoe Disaster Fund for 2000-2001 [RP 87-
          2001].


 (3)    The following paper is referred to the Standing Committee on
     Public Accounts for consideration and report and to the Portfolio
     Committee on Public Works for information:


     Report of the Auditor-General on the Financial Statements of the
     National Supplies Procurement Fund for 1999-2000 [RP 114-2001].


 (4)    The following paper is referred to the Standing Committee on
     Public Accounts for consideration and report and to the Portfolio
     Committee on Justice and Constitutional Development for
     information:
     Report of the Auditor-General on the Special Review of the Deposit
     Account Administered by the Department of Justice and
     Constitutional Development and Related Matters [RP 100-2001].


 (5)    The following papers are referred to the Standing Committee on
     Public Accounts for consideration and report:


     (a)     Report of the Auditor-General on the Financial Statements
          of the President's Fund for 2000-2001 [RP 99-2001].


     (b)     Report of the Auditor-General on the Financial Statements
          of the State President's Fund for 2000-2001 [RP 99-2001].


 (6)    The following paper is referred to the Standing Committee on
     Public Accounts for consideration and report and to the Portfolio
     Committee on Health for information:
     Report of the Auditor-General on the Financial Statements of the
     Health Donations Fund for 2000-2001 [RP 96-2001].


 (7)    The following paper is referred to the Standing Committee on
     Public Accounts for consideration and report and to the Portfolio
     Committee on Social Development for information:


     Report of the Auditor-General on the Financial Statements of the
     Social Relief Fund for 1999-2000 [RP 95-2001].


 (8)    The following paper is referred to the Standing Committee on
     Public Accounts for consideration and report and to the Portfolio
     Committee on Home Affairs for information:


     Report of the Auditor-General on the Financial Statements of the
     Refugee Relief Fund for 2000-2001 [RP 94-2001].


 (9)    The following paper is referred to the Standing Committee on
     Public Accounts for consideration and report and to the Portfolio
     Committee on Transport for information:


     Report of the Auditor-General on the Financial Statements of the
     Urban Transport Fund for 1999-2000 [RP 90-2001].


 (10)The following paper is referred to the Standing Committee on Public
     Accounts for consideration and report and to the Portfolio
     Committee on Trade and Industry for information:


     Report of the Auditor-General on the Financial Statements of the
     Independent Development Trust (Main Fund) for 1999-2000 [RP 76-
     2001].


(11)    The following paper is referred to the Portfolio Committee on
     Correctional Services. The Report of the Auditor-General contained
     in the following paper is referred to the Standing Committee on
     Public Accounts for consideration and report:


     Report and the Financial Statements of the Department of
     Correctional Services for 2000-2001, including the Report of the
     Auditor-General on the Financial Statements of Vote 6 -
     Correctional Services for 2000-2001 [RP 148-2001].


 (12)   The following papers are referred to the Portfolio Committee on
       Public Service and Administration. The Reports of the Auditor-
       General contained in the following papers are referred to the
       Standing Committee on Public Accounts for consideration and
       report:


       (a)   Report and Financial Statements of the Department of
             Public Service and Administration for 2000-2001, including
             the Report of the Auditor-General on the Financial
             Statements of Vote 24 - Public Service and Administration
             for 2000-2001 [RP 15-2001].


       (b)   Report and Financial Statements of the South African
             Management Development Institute for 2000-2001, including
             the Report of the Auditor-General on the Financial
             Statements for 2000-2001.


       (c)   Report and Financial Satements of the Public Service
             Commission for 2000-2001, including the Report of the
             Auditor-General on the Financial Statements for 2000-2001
             [RP 128-2001].


 (13)   The following paper is referred to the Portfolio Committee on
       Finance and to the Portfolio Committee on Provincial and Local
       Government:


     The Intergovernmental Fiscal Review for 2001 [RP 174-2001].


(14)    The following paper is referred to the Joint Monitoring
         Committee on Improvement of Quality of Life and Status of Women
         and to the Joint Monitoring Committee on Improvement of Quality
         of Life and Status of Children, Youth and Disabled Persons. The
         Report of the Auditor-General contained in the following paper
         is referred to the Standing Committee on Public Accounts for
         consideration:


     Report and Financial Statements of the Presidency for 2000-2001,
     including the Report of the Auditor-General on Financial
     Statements of Vote 1 - Presidency for 2000-2001 [RP 168-2001].


(15)    The following papers are referred to the Portfolio Committee on
      Finance:


     (a)     Report and Financial Statements of the Development Bank of
          Southern Africa Limited for 2000-2001.


     (b)     Report of the Executive Officer of the Financial Services
          Board on the Road Accident Fund for 1999-2000.


(16)    The following paper is referred to the Portfolio Committee on
      Minerals and Energy. The Report of the Auditor-General contained
      in the following paper is referred to the Standing Committee on
      Public Accounts for consideration and report:


      Report and Financial Statements of the Department of Minerals and
      Energy for 2000-2001, including the Report of the Auditor-General
      on the Financial Statements of Vote 29 - Minerals and Energy for
      2000-2001 [RP 172-2001].

TABLINGS:

National Assembly and National Council of Provinces:

Papers:

1. The Minister of Finance:

 Written Explanation from the Minister of Finance in terms of section
 65(2)(a) of the Public Finance Management Act, 1999 (Act No 1 of 1999)
 setting out the reasons why the South African Revenue Service could not
 table its Annual Report and Financial Statements for 2000-2001 in time:


     Written Explanation in terms of section 65(2)(a) of the Public
     Finance Management Act, 1999 (Act No 1 of 1999) for late tabling
     of Annual Report and Financial Statements


     In terms of section 55 of the Public Finance Management Act, 1999,
     the South African Revenue Service (SARS) must prepare and submit
     its financial statements to the Auditor-General and the relevant
     treasury within two months after the end of the financial year.
     The audited financial statements must be submitted to the relevant
     treasury and to the Minister of Finance within five months of the
     end of that financial year.  Section 65 of the Public Finance
     Management Act, 1999, provides that the annual report and
     financial statements must be tabled in National Assembly within
     six months after the end of the relevant financial year.


     The financial statements of SARS, as a public entity, must be
     prepared in accordance with Generally Accepted Accounting Practice
     (GAAP), unless the Accounting Standards Board approves the
     application of Generally Recognised Accounting Practice (GRAP). As
     the Accounting Standards Board has not been appointed yet, the
     Accountant General (National Treasury), performing the functions
     of the Board in terms of section 93(3) of the Public Finance
     Management Act, 1999, approved the application of GRAP on 21 May
     2001.


     Section 91(1)(b) of the Public Finance Management Act, 1999,
     however, also requires that the Minister of Finance must issue
     regulations prescribing the standards set by the Accounting
     Standards Board (in this case the National Treasury), before these
     standards can apply. Approval, in principle, was granted for the
     publication of these regulations and the regulations were
     published for public comment on 6 September 2001. Once the
     deadline for comment expires on 8 October 2001, the final
     regulations will be published after taking into account any
     comments received.


     In terms of section 55 of the Public Finance Management Act, 1999,
     the audited financial statements had to be submitted to the
     relevant treasury and the Minister of Finance before 31 August
     2001. As the regulations prescribing GRAP had not at that stage
     been published yet, SARS requested extension until 31 October 2001
     for the submission of the audited financial statements, which
     extension was approved by me on 14 August 2001.


     The annual report containing the financial statements can,
     therefore, not be tabled in National Assembly by the end of
     September 2001, as required by section 65 of the Public Finance
     Management Act, 1999, as the financial statements will only be
     finalised after the regulations setting the standards of GRAP have
     been published.

1. The Minister of Transport:

 Report and Financial Statements of the Department of Transport for 2000-
 2001, including the Report of the Auditor-General on the Financial
 Statements of Vote 33 - Transport for 2000-2001 [RP 159-2001].
                      TUESDAY, 16 OCTOBER 2001

ANNOUNCEMENTS:

National Assembly and National Council of Provinces:

1. The Speaker and the Chairperson:

 (1)    The following Bill was introduced by the Minister of Trade and
     Industry in the National Assembly on 16 October 2001 and referred
     to the Joint Tagging Mechanism (JTM) for classification in terms
     of Joint Rule 160:


     (i)     Lotteries Amendment Bill [B 81 - 2001] (National Assembly
          - sec 75) [Explanatory summary of Bill and prior notice of its
          introduction published in Government Gazette No 22743 of 10
          October 2001.]


     The Bill has been referred to the Portfolio Committee on Trade and
     Industry of the National Assembly.


     In terms of Joint Rule 154 written views on the classification of
     the Bill may be submitted to the Joint Tagging Mechanism (JTM)
     within three parliamentary working days.

National Assembly:

1. The Speaker:

 Message from National Council of Provinces to National Assembly:


 Bill passed by National Council of Provinces on 16 October 2001 and
 transmitted for concurrence:


 (i)    National Land Transport Transition Amendment Bill [B 39B - 2001]
     (National Council of Provinces - sec 76).


     The Bill has been referred to the Portfolio Committee on Transport
     of the National Assembly.