Mboweni’s plan fails miserably as civil servants refuse to leave

[Jopie Fourie]

Finance Minister Tito Mboweni’s plan to cut South Africa’s bloated civil service by encouraging officials to retire early appears to have failed miserably.

Mboweni’s target was for the civil service to shed 30 000 employees.

This he hoped to achieve by encouraging them to take early retirement without them losing any of their pension benefits.

State officials can retire from 55, but normally they are discouraged from doing so by subtracting 0.33% per month from their gratification and pension benefits.

In terms of Mboweni’s offer, this penalty fell away and a retiring official’s pension would only be calculated on the basis of their years of service.

Mboweni’s plan fails miserably as civil servants refuse to leave | City Press

Finance Minister Tito Mboweni’s plan to cut South Africa’s bloated civil service by encouraging officials to retire early appears to have failed miserably.

city-press.news24.com

 

[Jopie Fourie]

Why would any of them ever leave the comfort of their high paying positions in turn for doing nothing?

I surely hope that Tits Mbo never thought this plan would succeed!

 

[3WA]

So why don't they want to go? Aren't their pensions guaranteed (i.e. it doesn't matter how much they save, they still get the same monthly payment)?

 

[Milano]

So it is likely to end at around 26% after all provinces release figures. A monumental success by ANC standards and good enough reason for an extended festival of national looting.

 

[supersunbird]

So why don't they want to go? Aren't their pensions guaranteed (i.e. it doesn't matter how much they save, they still get the same monthly payment)?

Still based on years of service, and your final salary average over the previous 24 months. Stick out the comfy job for another 10 years, with salary increases, and you get even more at age 65.

 

[sox63]

So why don't they want to go? Aren't their pensions guaranteed (i.e. it doesn't matter how much they save, they still get the same monthly payment)?

As supersunbird pointed out, it depends much on the end salary average. Hence all the dumped ministers invariably end up resigning as MPs

 

[Hemi300c]

They won't retire early because their "benifits" would be reduced.
Salary would be cut by probably the cost of travel to from work.
Backhands and gravy would be cut to nil.
That's the pretty picture.

 

[3WA]

Okay, then maybe we should just load all their canteen food with trans fats, the bad type of cholesterol, sugar, and arsenic.

 

[supersunbird]

Okay, then maybe we should just load all their canteen food with trans fats, the bad type of cholesterol, sugar, and arsenic.

As if they don't do that themselves (besides the arsenic of course)

 

[HBee]

The very lucrative corruption perk does not work that well when you leave your cushy goverment position.

 

[Jet-Fighter7700]

why retire? wheres the fun in that?


then who would pay for the weekly new BMW?
BMW's dont grow on trees you know.

when you get paid millions to basically sit at home, why would you ever want to leave that?

 

[Rkootknir]

So why don't they want to go? Aren't their pensions guaranteed (i.e. it doesn't matter how much they save, they still get the same monthly payment)?

Like the article says, early retirement reduces your retirement benefits. The GEPF's basic pension & lump sum benefits are:

• Annual pension of: (1/55) * years of service * average annual salary over last 2 years of service
• Gratuity \ lump sum of: 6.72% * years of service * average annual salary over last 2 years of service

These are if a member has more than 10 years of service - the gratuity reduces for less service.

So, let's say a GEPF member has 20 years of service and salaries of R500k and R530k over the last two years. Average salary is then R515k p.a. and the benefits would be:

• Monthly pension of: 1/55 * 20 * R515k / 12 = R15 606
• Once-off lump sum of: 6.72% * 20 * R515k = R692 160

These benefits are reduced by (1/3)% for each month somebody retires before their normal retirement age (which is 60 for most members). In other words, if somebody were to retire at age 55 their benefits would be reduced by (1/3)% * 5 * 12 = 20% which means that for the above example the benefits become:

• Monthly pension of: R15 606 * 80% = R12 485
• Once-off lump sum of: R692 160 * 80% = R553 728

 

[TheChamp]

The very lucrative corruption perk does not work that well when you leave your cushy goverment position.

What corruption perks are you talking about? Or does a teacher and a government minister amount to the same thing in your eyes? last time I checked many civil servants were peasants who lived from hand to mouth.

 

[RaptorSA]

Well, do a goddamn Roll call and you'll find that most of these scumphucks are already on retirement.
Would be a stupid move to sign that little paper.

 

[reactor_sa]

Why would anyone leave their post at the gravy trough?

 

[geezer]

Like the article says, early retirement reduces your retirement benefits. The GEPF's basic pension & lump sum benefits are:

• Annual pension of: (1/55) * years of service * average annual salary over last 2 years of service
• Gratuity \ lump sum of: 6.72% * years of service * average annual salary over last 2 years of service

These are if a member has more than 10 years of service - the gratuity reduces for less service.

So, let's say a GEPF member has 20 years of service and salaries of R500k and R530k over the last two years. Average salary is then R515k p.a. and the benefits would be:

• Monthly pension of: 1/55 * 20 * R515k / 12 = R15 606
• Once-off lump sum of: 6.72% * 20 * R515k = R692 160

These benefits are reduced by (1/3)% for each month somebody retires before their normal retirement age (which is 60 for most members). In other words, if somebody were to retire at age 55 their benefits would be reduced by (1/3)% * 5 * 12 = 20% which means that for the above example the benefits become:

• Monthly pension of: R15 606 * 80% = R12 485
• Once-off lump sum of: R692 160 * 80% = R553 728

Damn!! If I had that option I would take it immediately! Based on those calculations my monthly pension would be about R45 000 and the lump sum ±R1 950 000. I wonder what the tax implications would be on the once-off lump sum?

 

[HBee]

What corruption perks are you talking about? Or does a teacher and a government minister amount to the same thing in your eyes? last time I checked many civil servants were peasants who lived from hand to mouth.

You know who this plan was targeted at right? not teachers.

 

[TheChamp]

You know who this plan was targeted at right? not teachers.

I thought it was for civil servants? Do tell me more.

 

[HBee]

I thought it was for civil servants? Do tell me more.

Middle and top management.

 

[TheChamp]

Middle and top management.

Source? Because that is not what is being said in the article, the offer was open to civil servants who were close to retirement age as I understand it.

Anyway your corruption allegations are still without substance.