People tend to forget that the Unemployment Insurance Fund (UIF) is not a charity where undeserving people stand in line to receive a free handout. It is insurance against loss of income, paid by workers every month, year after year.
This insurance is imposed on workers by the Department of Labor, which expects employers to collect insurance premiums or face legal consequences. Premiums are subtracted directly from employee wages and salaries, out of their pockets before their monthly or weekly paycheck reaches their bank account.
The Department of Labor and the employees of the FIU seem to have forgotten this, as well as the fact that it is their duty and obligation to resolve claims against this particular insurance fund.
Claims for maternity, death and loss of income must be resolved in a correct and timely manner.
When desperate people file a claim, the FIU and its employees are obliged to assist them. Many people who have suddenly lost their jobs are desperate.
However, when Moneyweb editor Ryk van Niekerk conducted a radio interview with FIU spokesperson Makhosonke Buthelezi, it was like sticking a stick in a hornet’s nest.
The interview was prompted by complaints sent to Moneyweb by people who said they had been waiting up to 18 months to get their money, and by others who complained that FIU employees refused to accept the claims because the complainant had found a new job.
The radio interview led to even more complaints, and the word “desperate” was often used: millionaires do not queue up at labor department offices in scruffy buildings.
One claimant writes: “Unfortunately, I am one of those people who have been waiting for the payment of an unemployment benefit since September 2020. The uFiling call center cannot understand why the payment has not been made as it has been received all the required documentation and is in your system.
“They have stepped up my case several times. I have exhausted all avenues: numerous calls to the uFiling call center, emails to uFiling, etc. I desperately need these funds.
“Please can you forward my email to Mr. Makhosonke Buthelezi on my behalf and maybe he can help,” he writes.
Listen to Ryk van Niekerk’s interview with FIU spokesperson Makhosonke Buthelezi (or read the transcript here):
Complaints of delays come from all sectors, indicating that the FIU is overwhelmed.
The National President of the Federated Hospitality Association of South Africa (Fedhasa), Rosemary Anderson, says it is incredibly difficult for Fedhasa members to access the only form of financial assistance available to them. “It has left us desperate,” he says.
Fedhasa members highlight daily how their experience of the process and system is riddled with inconsistencies and problems. “From the call center number that is disconnected or, when it was working, [being] attended by call center agents who were not trained to answer inquiries, to Sars [South African Revenue Service] errors that appear to be the cause of thousands of raw claims.
“Why are employees and employers who have faithfully contributed to the FIU for years not able to access their contributions, now more when they are desperately needed than in the history of the FIU?” Anderson asks.
“We must not lose sight of the fact that these funds [consist] employee and employer contributions. It’s your money, “he says, adding that the system is” just dysfunctional. ”
Affirmations of ‘good service’
Meanwhile, the FIU website and the latest annual report (for the year ending March 2020) boasts of good service.
“The fund’s call center is one of the pillars of its operational success. It has a total staff of 40 agents, always ready to serve FIU clients. Call center agents are well trained and exposed to ongoing assessment, mentoring, and counseling, resulting in customer satisfaction, reduced wait time, and increased first call resolution.
“During the year under review, the FIU call center handled more than 843,329 calls from FIU clients compared to 382,434 in 2019. This represents a 121% increase in calls received,” according to the annual report.
The annual report further states that 93% of claims for unemployment benefits were paid within 15 business days, most claims for maternity benefits were finalized within 10 business days, and 95% of claims compensation for death were resolved within 20 days.
Experience on the ground seems to differ with this view of the situation.
Buthelezi admitted in the radio interview: “The system is now overwhelmed because it was built to process X number of claims, but with the rise in unemployment, there has been that problem, which is now overwhelmed. It takes more than what was built.
“If you go and show up at the workplace, the problem there is that some people are working at home and we are taking [only] X number of people per day, ”he said. He noted that the Labor Department offices are not working with all of their staff.
Ters, and now Wabu
Meanwhile, the workload has increased enormously.
Unemployment in SA has risen to the highest levels in history, while the government also tasked the FIU with distributing the grants under the Covid-19 Temporary Employer and Employee (Ters) Plan.
Last week, on Wednesday (August 25), the FIU got even more work when the government started using it to distribute grants under the temporary financial aid scheme for workers affected by the riots (Wabu).
The plan has been put in place to help those whose workplaces have been closed due to the recent riots in KwaZulu-Natal and Gauteng, resulting in workers receiving partial or no pay.
Stakeholders believe that the distribution of these grants is being prioritized and that the FIU is neglecting its primary role.
Adri Smith, an independent consultant who helps employers and employees register with the FIU, make monthly payments and submit claims, told Moneyweb that it appears the FIU is purposely delaying payments and / or giving preference to payments of Ters.
“The excuses range from forms that have been lost or claims are incomplete. Even when everything is correct and the claims go to the next level, the payment does not go through. No reasons are given when claims are not paid, ”says Smith.
“Initially, the online claims system worked well when it was introduced. But then changes were made to it and the new system is full of bugs. When it came back online, there was a large backlog of orders, which was compounded when the FIU began processing Ters’ claims. ”
Smith says the call center is basically useless.
“If they answer the calls, the excuses are endless. It ranges from not working with all staff due to the Covid pandemic to ‘the system is down’, loss of load or lunch break, “says Smith.
“People are crying, they are hopeless, they have no food,” Smith says, adding that people believe the fund has been raided.
“It is not charity, people have paid for this insurance for years and decades,” he says.
The FIU should have a lot of money, which may be why the government looked in its direction during the Covid-19 crisis.
Marsha Bronkhorst, who at the time of the last annual report was the acting commissioner of the fund, said in her report: “The healthy state of the fund’s finances allowed us to set aside a budget of R40 billion for the benefit of Covid-19 Ters for a period of three months.
“Support for the Covid-19 Ters Benefit is aligned with Section 5 (b) of the Unemployment Insurance Amendment Act, which allows the fund to provide financial support to plans that aim to retain employment for workers.” .
Financial statements show that the FIU collected over R20 billion in premiums during the year to March 2020, earned investment income of almost R12 billion, and received an additional R22 billion grant from the Department of Labor.
It paid claims worth R15.2 billion, while operating expenses amounted to around R2.6 billion. The biggest expense was salaries: 1.5 billion rand.
By far the highest cost item, according to the income statement? Fair value adjustments, in the amount of R22 billion, to its listed equity and bond portfolios, and other impairment of investments in associates and joint ventures amounting to R250 million. However, this should not affect your cash flow.
The FIU’s listed equity portfolio, managed by Pubic Investment Corporation (PIC), decreased in value to R35 billion at the end of March 2020 compared to R43 billion at the end of March 2016. The bond portfolio decreased from almost R92 billion to R84 billion.
However, while unrealized gains and losses due to market fluctuations should be accounted for in the income statement, they do not affect cash flow. In fact, the cash flow statement confirms it.
The only investment-related cash outflow was additional investments (of almost R3 billion) in unlisted associates.
The FIU’s investments in associates and joint ventures have drawn attention in the past when billions were invested in unlisted companies amid allegations that the owners are “wired.” In fact, these investments have been amortized year after year at a fraction of the original investment value. In some cases, even low valuations seem dubious.
However, the FIU should have enough money to pay valid claims.
It is your responsibility to ensure that you have adequate systems and people in place to resolve complaints and to assist people who are not familiar with the procedures involved.
Perhaps it is time for the non-executive directors of the FIU to do their job as expected.
There are almost 50 non-executive directors spread across South Africa, some earning as much as R500,000 per year. They must hold management and staff accountable.
Read: UIF Ters paid R161m in irregular payments