31 Aug 2024

Parliament has been informed that the Office of the Accountant General (OAG) has commenced payment of gratuity enhancement from August 15.

Answering a parliamentary question on Tuesday, Minister of Defence and Security, Honourable Kagiso Mmusi said the existing Government Accounting and Budgeting System (GABS) challenges however, had affected the speed and volume of payments.

“To mitigate this challenge, the OAG is working on processing some of the payments through the local government payment system known as Great Plain. As it can be appreciated, these calculations involve data that has been residing in the old government systems prior to GABS and their retrieval is slower hence the delay,” Hon. Mmusi said.

Additionally, he said issues around tax exemption took longer to resolve as government had expressed the desire that the monies should not be taxed.

“This will allow maximum benefit impact on the recipients given that most of them are currently struggling. In the meantime, the amendment of Regulations 60 and 48 of Botswana Defence Force (BDF) subsidiary legislation as necessitated by the Presidential Directive, have been effected and published on April 19 respectively,” he said.

He also indicated that regarding Botswana Public Officers Pensions Fund (BPOPF), the process encompassed increasing the initial transfer values by the recalculated amount, applying relevant interest rates to the new transfer values and calculating the new fund credit and dispensing it on the basis of whether the individual is active, deferred, deceased or a pensioner.

He added that BPOPF and its actuaries would be employing the same mathematical formula that was established and used in 2001 when transfer values were calculated by DPSM and its actuaries.

“The only difference this time is that the denominator of n/450 will be replaced by n/375,” he said.

Parliament also heard that as of August 26, 321 retired soldiers had been paid by the Accountant General and others were being processed according to the capacity of the GABS and Great Plains. On other issues, Hon, Mmusi told Parliament that the founding legislation of the BDF, Botswana Defence Force Act (Cap 21:05) prescribed a pension scheme for BDF members separate and different from that of the civil service.

“The BDF scheme notably cautioned against early compulsory retirement ages in the military by placing the denominator for calculation of members’ pension at n/600 against the then civil service pension denominator of n/720. This created a deliberate differential in the accrual rates between members of the BDF and the civil service, which was necessary to compensate members of the BDF for their early retirement ages pre-1998,” he explained.

However, he said in 1998 government improved the denominator for the civil service to n/450, which was also applied to the BDF. “This was further maintained when members of the BDF joined the defined contributory Botswana Public Officers Pension Fund (BPOPF) in 2001.

Ordinarily the adjustment of the civil service denominator from n/720 to n/450 should have translated to moving the denominator of members of the BDF from n/600 to n/375 to maintain a proportional differential in the accrual rates between the two services. This would have maintained parity in terms of living standards between retired members of the BDF and retired members of the civil service. In addition, the existing BDF legislation in 1998 and 2001 was not amended to reflect the n/450 denominator.”

Also, he said when the BPOPF took effect in April 2001, government undertook an actuarial valuation to quantify the value of each member’s accrued benefit using the n/450 denominator, and the amounts were allocated to each member under BPOPF as transfer values.

In addition, he said BDF members who retired after 1998 under the old defined benefit dispensation were subjected to the n/450 denominator, hence the restoration of the pension denominator differential ratios through Presidential Directive CAB 7/2024 affected both groups.

Updating Parliament on progress of the implementation of the directive, he said a composite team comprising MDS/BDF personnel, OAG and BPOPF/NMG was setup to coordinate implementation of the directive, and had been working meticulously to ensure that calculations were accurate so that the right people were paid correct amounts.

To date, he said the exercise had progressed to the commencement of payments, albeit with challenges. “It has been established that some 9 300 former and active members of the BDF will benefit from the exercise,” he said.

He further indicated that the initial effort at the OAG was to retrieve files of all individuals projected to be affected by the exercise.

“This was a lengthy process as the files have been warehoused from 1998 and every file of the name in the list had to be painstakingly located. The files were then verified to confirm that the individual indeed qualifies for this exercise and that their personal information is correct. It is worth indicating that some individuals who separated from the BDF during the targeted period are not eligible for denominator correction as they left active service before meeting the minimum pensionable service period as provided for in the BDF Act and the applicable defence regulations.”

He said after verification, the OAG commenced to recalculate the pension differentials based on the new denominator. “To date 3 753 files have been assessed, with gratuity enhancement differentials calculated and ready for payment, while 1 760 not eligible for enhancement are being prepared and passed to BPOPF for recalculate of transfer value differentials. 435 individuals who remained under the old pension scheme will be paid by the OAG,” he added.

Member of Parliament for Nkange, Dr Never Tshabang had asked the minister to update Parliament on the promise made to pay retired soldiers by 3uIy 2024 and explain what had caused the delay in disbursements.