The Unemployment Insurance Fund (UIF) has employed external firms to painstakingly verify that the R65.2bn it paid out under the temporary employer/employee relief scheme (Ters) was received by the correct beneficiaries.
Ters was introduced during the Covid-19 pandemic in 2020/21 to help companies in distress and prevent job losses by subsidising employee wages.
UIF officials told members of the National Council of Provinces’ select committee on economic development & trade in a briefing on Wednesday that a lot of fraud had been uncovered in the verification process. This resulted in several convictions by the courts.
Where Ters funds were paid incorrectly they were being collected.
The inability of the UIF to prove the Ters funds were paid to the right companies and beneficiaries resulted in a qualified audit outcome.
UIF CFO Fezeka Puzi expects the verification of all beneficiary companies will be finalised in the current financial year.
She said the UIF was working with the Special Investigating Unit and the Hawks during this endeavour to track payments, as well as with the Fusion Centre and the Asset Forfeiture Unit.
Puzi said more than 700 cases of wrong payments were being investigated and there had been over 20 convictions.
Employment & labour department acting director-general Jacky Molisane highlighted persistent problems at the UIF, which included delayed payments, outdated systems and the fund’s limited accessibility to vulnerable workers.
She said these challenges had undermined public confidence and deepened the hardships of those the fund was meant to protect.
The digital transformation of the fund would hopefully overcome this, with Puzi noting the fund planned a R1bn capital expenditure to integrate its IT system. This will improve the turnaround times for claims.
Another reason for the UIF’s qualified audit opinion has been its inability to account for its investments in unlisted companies.
The Public Investment Corporation (PIC) acts as asset manager for the UIF among other funds and its unlisted investment portfolio has come under scrutiny after several bad investments. The UIF has terminated its unlisted investment mandate with the PIC.
Puzi explained that some of the unlisted companies were in liquidation or business rescue and did not have audited financial statements. On this basis the UIF was not able to resolve the auditor-general’s qualification of its financial statements.
She said the fund had been trying to verify the details of the unlisted investments with the PIC so that it could fully account for these investments.
By the end of March 2025 the UIF had assets under management of R169bn — R97bn in various kinds of bond instruments, R16bn in the money market, R29bn in equities, R3.6bn in properties, R13.4bn in foreign equities, R10bn in unlisted investments and R303m in unlisted properties.
The UIF is funded by a levy on employers and employees (1% of an employees’ gross salary each) and projects to receive R26.6bn in contributions in 2025/26, R27.9bn in 2026/27 and R29.2bn in 2027/28.
Including other sources of income such as interest and penalties for nonpayment of contributions and investment returns from the PIC it envisages its total income over the next three years to be R36.4bn, R38bn and R39.9bn respectively.
Puzi highlighted the huge underspend on labour activation programmes in the 2024/25 financial year, with only R1.2bn of the R9.9bn budget being spent, which she attributed to delays in finalising proposals from service providers.
Gaps had been identified in due diligence that had had to be addressed. She was confident performance would improve this year.
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