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Employers who are electronic contributors

All participating employers interact regularly with GEPF. They pay pension contributions over to the Fund every month and notify us when new members are being admitted and existing members are withdrawing. Employers also make sure that the information that GEPF has on their employees (our members) is accurate and up to date.

This interaction can take place electronically or manually, depending on the salary administration system that each employer uses.

Electronic interaction is possible when an employer uses the National Treasury’s transversal systems, Persal or Persol, to administer its salaries. Persal is the payroll system used in most national and provincial government departments, while Persol is the system used in the uniformed services. Employers with Persal or Persol have the advantage of a single electronic interface with GEPF, whether for admitting new members, collecting contributions or maintaining members. Currently, about 98 percent of all participating employers are electronic contributors.

Employers are required to pay the monthly pension contributions to GEPF by the seventh day of the following month. The Fund has a clearly defined contribution management process for receiving, reconciling and reporting on these payments.

In the case of electronic transactions, our contribution management process consists of the following steps:

  1. Raising the amounts payable by the employer and member: This information comes from the monthly salary information obtained from Persal and Persol. The information is available by the third week of every month for the month concerned. Information is also received from the South African Revenue Service (SARS) and South African Social Security Agency (SASSA). GEPF checks that the salary information is complete and valid. If it is not, we follow up with National Treasury’s Transversal Systems.
  2. Allocating receipts: GEPF captures and allocates receipts for payments to the debtor accounts daily; however to finalise this process for a specific month, the receipts must be captured and allocated by the 10th of the next month in preparation for reconciliation.
  3. Reconciliation: In the last week of the month, GEPF does a financial reconciliation to check that there is a match between amounts received and amounts payable. We also check that receipts have been correctly captured and that any employer refunds have been properly processed. The last part of the reconciliation process is to calculate the contributions outstanding for the month.
  4. Following up on discrepancies: This step is aimed at correcting overpayments and underpayments. Contributions received are checked from the 8th day of the month to determine which contributions are outstanding for the calculation of interest on late payment.
  5. Raising late payment interest: Once interest on late payments is calculated, letters are sent to the employers to inform them accordingly. Should no response be received, the matter is followed up and then escalated in terms of GEPF's Debt Collection Policy. GEPF bases late payment interest on the Repo rate + 3%.

Reporting on the results: Each month, we compile a status report on contributions payable and amounts owing. This is submitted to GEPF management and the Board's Benefits and Administration Committee (BA-C).

Employers who are manual contributors

Manual contributors are employers who need to apply to GEPF’s Board of Trustees to become participating employers. Some of these employers also do not use a payroll interface or the Persal/ Persol Transversal Systems, and instead use manual processes to interact with GEPF.

Collecting contributions

Manual contributors have different options for paying pension contributions over to GEPF. They can submit salary schedules or create a salary output file/payroll interface which uses the same file layout as the Persal data set. Contributions must be paid by the seventh day of the following month regardless of which payment option an employer chooses to use.

GEPF has a clearly defined contribution management process for receiving, reconciling and reporting on manual payments. It consists of the following steps:

  1. Raising the amounts payable by the employer and member: GEPF checks that participating employers have submitted their salary information, whether on salary schedules or through a salary output file. We then capture the information on Excel spreadsheets.
  2. Allocating receipts: We capture and allocate receipts for payment to the debtor accounts daily. However to finalise this process for a specific month, the receipts must be captured and allocated by the 10th of the next month in preparation for reconciliation.
  3. Doing reconciliation: In the last week of every month, GEPF does a financial reconciliation to check that there is a match between amounts received and amounts payable. We also check that receipts have been correctly captured and that any employer refunds have been properly processed. The last part of the reconciliation process is to calculate the contributions outstanding for the month.
  4. Following up on discrepancies: This step is aimed at correcting overpayments and underpayments. Contributions received are checked from the 8th day of every month to determine which contributions are outstanding for the calculation of interest on late payments.
  5. Raising late payment interest: Once interest on late payments has been calculated, letters are sent to the employers to inform them accordingly. Should no response be received, the matter is followed up and then escalated in terms of GEPF's Debt Collection Policy. GEPF bases late payment interest on the Repo rate + 3%.

Reporting on the results: Each month, we compile a status report on contributions payable and amounts owing. This is submitted to GEPF management and the Board's Benefits and Administration Committee (BA-C).

Collecting Purchase of Service instalments

Members

GEPF members are allowed to increase their pensionable service by purchasing additional service. Members have to apply for this and, if GEPF approves their application for the Purchase of Service, they must pay the approved amount with interest. The Fund recovers these payments through a monthly instalment deduction or once-off payment. These amounts are collected by their employer and are paid directly to GEPF.

When collecting Purchase of Service instalments, GEPF uses the following process:

  1. Raising the amounts payable by the member: Upon approval of the quotation by GEPF, a debt would automatically be raised on the system. Normally members are given a three-month period before instalments are deducted. Every month, an automated run is done to raise instalments from the capital amount and add interest (as per GEPF's quotation).
  2. Deducting the instalments due: The runs takes place on the last weekend of the month.
  3. Persal/Persol deduction: On a monthly basis, the employer would deduct the Purchase of Service instalment against the member’s salary and pay it over to GEPF.
  4. Reconciliation: The amount deducted from the member’s debt as an instalment is set off against the amount deducted from the member’s salary as reflected on Persal/Persol.
  5. Following up on discrepancies: The reconciliation is performed to identify defaulting members. When adjustments have to be made, letters are sent to members.
  6. Reporting on the results: A monthly status (debts record) report is submitted to GEPF management.

Employers

Each month, the employer deducts the Purchase of Service instalment against the member’s salary and pays it over to GEPF.

Employers are required to pay the monthly deductions over to GEPF by the seventh day of the following month. The Fund has a clearly defined process for receiving, reconciling and reporting on the Purchase of Service payments, as follows:

  1. Raising the amounts payable by the employer: This information comes from the monthly salary information obtained from Persal/ Persol. The information is available by the third week of every month for the month concerned.
  2. Allocating receipts: GEPF captures and allocates receipts for payments to the debtor accounts daily; however, to finalise this process for a specific month the receipts must be captured and allocated by the 10th of the next month to the relevant Purchase of Service suspense account, in preparation for reconciliation.
  3. Reconciliation: One month in arrears, reconciliation is performed to reconcile payable instalment and amount allocated.
  4. Following up on discrepancies: This step is aimed at correcting overpayments and underpayments. If the payment was late, it is followed up in terms of GEPF's Debt Collection Policy.
  5. Raising late payment interest: On a monthly basis, GEPF calculates late payment interest based on the Repo rate+ 3%.

Reporting on the results: A monthly status report on amounts payable and owing is submitted to GEPF management and the Board's  Benefits and Administration Committee (BA-C).

Collecting additional liability claims

According to Section 17 of the Government Employees Pension Law (GEP Law), if an employer pays its employees enhanced pension benefits that constitute an additional liability to the Fund, the employer will be held liable for the extra costs. The additional costs are referred to as an “additional liability” and will be claimed back from the employer by GEPF.

Here are some examples of situations in which the employer would be liable for additional costs:

  • An employee is discharged because his or her post is abolished;
  • Discharge is in the interest of the employer;
  • The President or Premier of a province is appointing a person whose service is not recognised as pensionable service; and/or
  • An employee is discharged because of an injury or ill-health that came about in the course of his or her employment.

In these examples, the employer carries the cost of the additional liability because the pension contributions paid did not provide for the enhanced benefits. There are also a number of other situations where additional liabilities could arise, for which the employer must pay. Employers are urged to familiarise themselves fully with the GEP Law and the rules of the Fund so that they are aware of the cost implications of offering enhanced benefits.

The collection process (from employers)

When collecting additional liability claims from employers, GEPF uses the following process:

  1. Raising the amounts payable by the employer and member: This is done every quarter, after the actuaries have calculated the amounts owing. The actuaries send GEPF the calculations, actuarial letters and a list of members. On receipt of these, GEPF raises the employer debt and sends claim letters to the employers to recover the amounts due.
  2. Allocating receipts: Any amount received in respect of the debt is allocated against that employer.
  3. Reconciliation: The amounts received are reconciled with the amounts owing.
  4. Following up on discrepancies: Defaulting employers are issued with escalation letters as per GEPF’s Debt Collection Policy.
  5. Raising of late payment interest: Each month, GEPF calculates late payment interest based on the Repo rate+ 3%.

Reporting on the results: Status reports are submitted to GEPF management.

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