UIF ANNUAL REPORT PRESENTATION FOR 2004/05Portfolio Committee01 November 2005

INTRODUCTION

Thank you for inviting us to present to you the Annual Report and Annual Financial Statements for the 2004/05 financial year of the Unemployment Insurance Fund

MANDATE

The Unemployment Insurance Fund was established in terms of Section 4(1) of the Unemployment Insurance Act, 2001.

The Fund administers the unemployment insurance contributions collected from employers and employees to pay benefits and related administrative expenses.

KEY OBJECTIVES OF THE FUND

OBJECTIVES:– Broaden coverage of Beneficiaries– Improve Service delivery– Strengthen Compliance and Enforcement– Sustain an affordable benefit regime– Resolve legislative and administrative

challenges.

Achievements – 2004/05

FINANCIAL VIABILITY IMPROVED– Financial Reserves up 50%

• Accumulated Reserves of R10,197 billion up 50% - fully reserved as at end of March 2005.

– Revenue greater than total expenditure• Net surplus of R2,071 billion compared to R121 million for

2003/04.• The Fund received R6,152 billion in revenue and paid out R2,475

billion in benefit payments up 9% and 18% respectively on 2003/04.

– Investments with PIC increased by 81%• Investments with PIC valued at R9, 759 billion compared to prior

year value of R5, 389 billion.

Benefit type Claims‘000 

% up year

Amount (R)000

% up on year

Unemployment 440 12% 1,832,349 19%

 

Illness 26 30% 135,775 24%

 

Maternity/Adoption 72 14% 289,534 9%

 

Dependents 25 9% 217,846 20%

 

Total   563 2,475, 504

Over half a million beneficiary claims paid – up 13%

Number of beneficiaries by benefit type over the years

Unemployment IllnessMaternity/

Adoption Dependants Grand Total

2001 544000 17000 55000 21 637000

2002/03 463000 18000 63000 25000 569000

2003/04 393000 20000 63000 23000 499000

2004/05 440000 26000 72000 25000 563000

+12% +30% +14% +9% +13%

Unemployment Illness Maternity/Adoption Dependants

2002/03 2,030205 97,388 284,832 168,738

2003/04 1,536013 109,442 266,012 182,104

2004/05 1,832349 135,775 289,534 217,846

+19% +24% +9% +20%

Snapshot of Monetary value of benefits paid over the years

Improving Client Satisfaction - Number of Approved claims for 04/2004 to 07/2005 up 2.5%

86.00%

88.00%

90.00%

92.00%

94.00%

96.00%

%age approved

%age approved 89.50% 92.30% 94.80%

2003 2004 Jul-05

Improving Client Satisfaction - Number of Rejected claims for 04/2004 to 07/2005 down 2.5%

0.00%

5.00%

10.00%

15.00%

%age of claims rejected

%age of claims rejected 10.50% 7.70% 5.20%

2003 2004 Jul-05

Improving Compliance: Number of Commercial employers and employees registered

500000052000005400000560000058000006000000620000064000006600000

Jan-04

Feb-04

Mar-04

Apr-04

May-04

Jun-04

Jul-04

Aug-04

Sep-04

Oct-04

Nov-04

Dec-04

Jan-05

Feb-05

Mar-05

Apr-05

May-05

Jun-05

Jul-05

Aug-05

Sep-05

Commercial Employees registered

Steady growth of Commercial Employers registered

380000390000400000410000420000430000440000450000460000470000480000490000

Jan-04

Feb-04

Mar-04

Apr-04

May-04

Jun-04

Jul-04

Aug-04

Sep-04

Oct-04

Nov-04

Dec-04

Jan-05

Feb-05

Mar-05

Apr-05

May-05

Jun-05

Jul-05

Aug-05

Sep-05

Improving compliance: Number of Dosmetic employers and employees registered

0

100000

200000

300000

400000

500000

600000

700000

Jan-04

Feb-04

Mar-04

Apr-04

May-04

Jun-04

Jul-04

Aug-04

Sep-04

Oct-04

Nov-04

Dec-04

Jan-05

Feb-05

Mar-05

Apr-05

May-05

Jun-05

Jul-05

Aug-05

Sep-05

Steady Growth in Domestic Employer Registration

470000

475000

480000

485000

490000

495000

500000

505000

Jan-04

Feb-04

Mar-04

Apr-04

May-04

Jun-04

Jul-04

Aug-04

Sep-04

Oct-04

Nov-04

Dec-04

Jan-05

Feb-05

Mar-05

Apr-05

May-05

Jun-05

Jul-05

Aug-05

Sep-05

Steady Growth in Domestic Employees registered

Domestic Employees registered 482860 484959 488988 489948 492712 493904 495066 495076 497530 498100 498659 498927 498210 498949 499165 499597 499866 500061 500348 500559 500683

31-Jan-04

29-Feb-04

31-Mar-04

30-Apr-04

31-May-04

30-Jun-04

31-Jul-04

31-Aug-04

30-Sep-04

29-Oct-04

30-Nov-04

31-Dec-04

31-Jan-05

28-Feb-05

31-Mar-05

30-Apr-05

31-May-05

30-Jun-05

31-Jul-05

31-Aug-05

30-Sep-05

Improving Compliance – 2004/05

Commercial Registrations

Employers 481,608

Employees 6,475,541

Domestic Registration

Employers 631,593

Employees 500,683

   target set for

March 2005% @ 31 March

2005 %variance

African male 39.60% 21.94% 17.66%

  female 33.90% 32.29% 1.61%

Asian male 1.20% 0.63% 0.57%

  female 1% 0.94% 0.06%

Coloured male 2% 1.88% 0.12%

  female 2.10% 3.76% -1.66%

White male 11.20% 4.39% 6.81%

  female 9% 32.60% -23.60%

Disability   5% 1.57% 3.43%

Improving diversity in the workplace: Employment Equity Targets

Improving Management Capacity

Completed the recruitment of key personnel:• Chief Financial Officer.• Four Executive Managers.

Strengthening of Management

Director General

Deputy Director General

Commissioner

CFOChief financial officer

CIOInformation

officer

OPSOperations

FIN FIN FIN FIN

Non Executive Board

Minister of Labour

Regionaloffice

Regionaloffice

Regionaloffice

Regionaloffice

Risk mgt

Improving Institutional Infrastructure and Capacity

Key projects finalised and ready for implementation are;– Improved operational system (Siyaya) finalised and rolled

out for national pilot in April 2005.– Integrated Financial Information system (Axsone)

finalised and implemented in April 2005/06.– Independent review of the corporate form of the UI Fund

completed and approved by Minister. Task team appointed for implementation in 2005/06.

Improving Accountability: Improved Audit Report for 2004/05

The Auditor General’s qualified Report is a positive departure from the previous three years of disclaimer.

Substantially reduced number of qualifications and matters of emphasis reflects improved systems of internal control. – Number of qualifications down (75%) to 2 from 8

and matters of non compliance down (68%) to 5 from 16 when compared to prior year.

Improving Accountability

Auditor General’s report when compared to previous years indicate substantial improvements in areas of management relating to;– Internal control environment– Accounting processes– Services rendered by the Department of Labour– Fixed Assets– General computer controls

UIF Operating Result – 2004/05-R2bn Surplus-

2004/05 2003/04

R’000 R’000

Revenue 6,831,267 6,096,336

Benefit expenditure (2,475,504) (2,093,870)

Other expenditure ( 532,188) ( 523,650)

Surplus before reserving 3,823,575 3,478,816

Transfer to reserves (1,752,000) (3,357,562)

Net Surplus 2,071,575 121,254

Financial Highlights for 2004/05

 

R Million R Million

Percentage change2004/05 2003/04

Contributions income 6,152 5,646 up 9%

Investments income 668 448 up 49%

Other Revenue 10 1 up 900%

Benefit Expenditure 2,475 2,094 up 18%

Administrative and other Expenses 312 281 up 11%

Staff Costs 219 243 down -10%

Net Income before reserving 3,824 3,477 up 10%

Investments 9,759 5,389 up 81%

Reserves 10,197 6,374 up 50%

Total Assets 10,461 6,556 up 50%

Growth in investments up 81%Growth in investments up 81%

2002/2003 2002/2003

2001 2001

- 255k d- 255k deficit

2,620,052 2,620,052 investmentsinvestmentsR R

20020033/200/20044

5,389,000 5,389,000 investmentsinvestments

9,759,000 9,759,000 investmentsinvestments

2004/2005 2004/2005

Growth in Revenue up 9%

FiveFive year revenue growth year revenue growth

2002/2003 2002/2003

2001 2001

20002000

2.72.7

2.82.8

4.34.3

R bnR bn

5.655.65 20020033/200/20044

2004/2005 2004/2005

6.126.12

Growth in Benefit expenditure up 18%

Benefit expenditureBenefit expenditure

2002/2003 2002/2003 2.092.09

2.482.48

R bnR bn

2004/2005 2004/2005

Financial Sustainability

An asset liability study conducted by the Fund’s Actuary concluded the following;– Reserves required to meet potential future

liability is estimated as R8,7bn at March 2005 as of that date the Fund had R10,2bn in reserves (R1,4bn above the required amount).

– The Actuary also concluded the Fund is on a sound financial position on a cash flow basis for the next ten years.

QUESTIONS