With Disability Income insurance, an insurance company may limit the monthly benefit amount

This section deals with some additional benefits currently provided outside the Fund for Fund members.

The disability income benefit refers to the monthly income that would be paid to you by the insurance company in the event that you become disabled or are too ill to work, and are therefore unable to receive your normal income from employment. This benefit can be paid even if the illness or disablement is only temporary and you are expected to recover and return to work eventually.

The Pension Funds Act prevents the Fund from providing a disability income benefit to members, because a retirement fund is not allowed to pay a temporary pension (i.e. a monthly pension that would cease when the member recovers or reaches retirement age).

The benefits payable if you become disabled and are unable to continue in office are therefore provided for by a separate insurance policy, outside the Fund. The cost of this insurance however forms part of the 4.8% of pensionable salaries that the State provides for insured benefits for political office-bearers.

The material on these pages represents only a summary of the main terms of the insurance policy, which are very complex and may change from time to time. In the event of a dispute arising, reference will have to be made to the policy contract, which will take precedence.

In this section, you can find out more about:

• What the definition of disablement is
• What disability income benefit you will receive
• What happens to your Fund membership
• What happens if I you are declared “fit for work”
• When your disability benefit stops
• The increase in your benefits each year
• Benefits payable should you die while receiving a disability income benefit
• The exclusions
• Providing evidence of good health

What is the definition of disablement?

You will only be regarded as disabled by the insurer if, 6 months after the date of your disablement, the insurer finds that you are unable to continue in political office because of illness, accident or injury, and you suffer a loss of income as a result.

It is important to note that disability insurance is only provided to contributory members under the age of 65. It is not possible to obtain this kind of insurance for older members.

It is also important to note that a disability that does NOT prevent you from carrying out the duties of your office will NOT qualify you for the disability benefit. Similarly, a member who is already disabled (e.g. who is in a wheelchair) when he or she takes up office will not qualify for the benefit – the benefit is intended to replace your salary as a member, not to boost it!

If you are disabled when you take up office, and your condition deteriorates so much that you are unable to continue in office, it is likely that the insurer will at least consider you for a benefit. In this case the 6-month “waiting period” will run from when your condition deterioriated so that you were no longer able to carry out your duties.

If you are still receiving a disability benefit 5 years after your date of disablement, the insurer will reconsider your condition. At that point, the insurer will continue the benefit only if, in the insurer’s assessment, injury or illness has left you substantially unable to carry out any job, including self-employment, for which you are or could reasonably be expected to become qualified or suited, taking into account the degree of disablement and your knowledge, training, education, ability and experience.

What disability income benefit do I receive?

In the event you become ill or disabled and the insurer accepts the claim, then after the six-month “waiting period”, a benefit of 75% of monthly pensionable salary will be payable. This is subject to a maximum benefit of R 120 000 per month – this maximum may be increased from time to time. (Remember that pensionable salary is not the same as your Total Remuneration Package.)

The tax treatment of this benefit is covered in the section of this site titled “Taxation of Benefits”.

What happens to my Fund membership?

Importantly, you remain a member of the Fund while you are still in receipt of a disability income benefit (even though you are no longer drawing an income from your political office and, in fact, will probably have given up your political office).

For the purposes of the Fund benefits you have a deemed pensionable salary, which is defined to be your pensionable salary at the date you became disabled, increasing in line with inflation each year (but with a maximum yearly increase of 7% p.a., if inflation rises above this level).

This means that if you were to die while still receiving the disability income benefit, your dependants would be entitled to all the normal death benefits based on your deemed pensionable salary. Should you retire, you will be entitled to the retirement benefits as described above.

While you are disabled, the Employer continues to pay contributions on your behalf, and you continue to contribute to the Fund at a rate of 7.5% of your deemed pensionable salary.

Notwithstanding the above, you do have the right to take either a resignation benefit or (if you are over 50) a retirement benefit from the Fund while you are in receipt of the disability income benefit, i.e. before the disability income benefit ceases, if you wish to do so. You are strongly urged not to do this. For example, if you do this your Fund membership will cease and you will lose the right to an insured Fund death benefit. The normal options on retirement or resignation will apply to you, except that you may not become a Deferred Beneficiary of the Fund.

What happens if I am declared “fit for work”?

The expectation is that, if your benefit ceases because the insurer decides that you no longer meet the definition of disablement (as discussed above), you would return to office. Since it is likely that your position would have been filled by another member, this is a matter that you would have to discuss with your Party.

When does my disability benefit stop?

If your disablement occurred before age 45, then the benefit will cease at the end of the month in which you turn 50 (or on earlier recovery, or earlier death).

If your disablement occurred at age 45 or above (but before age 65), then the benefit stops 5 years after the date of disablement or at the end of the month in which you turn 65, if earlier (or on earlier recovery, or earlier death).

When your disability benefit ceases, you will be required to take a retirement benefit (if you are over age 50) or a resignation benefit from the Fund, if you have not already done so. The normal choices available on retirement or resignation will be available to you.

Does my disability income benefit increase each year like my salary would?

Your disability income benefit will increase by 7% each year, or by the rate of inflation if less. Benefits increase from 1 September each year. A (lower) pro-rata increase will be granted in the first year of disablement.

What happens if I die while I am in receipt of a disability income benefit?

You beneficiaries will receive the same death benefits from the Political Office-Bearers Pension Fund as if you were an in-service member (as described earlier), unless you have taken benefits from the Fund and therefore ceased to be a member before you die.

Are there any other exclusions?

The benefits are subject to the detailed conditions set out in the group temporary disability income insurance policy. The main restrictions are:

• Disability as a result of nuclear, chemical and biological terrorism and active participation in war or warlike activities will not be covered. The insurer may also reject claims where disablement has arisen because of a terrorist attack.
• Disability as a result of committing a crime, attempting suicide or deliberate exposure to exceptional danger will not be covered.
• When you first take up office, you need to be actively at work on the first day of your appointment to qualify for this cover. If you are absent on the date on which your term of office commences, you will only be covered when you have served 8 consecutive weeks “actively at work”.
• If you become disabled from a known cause that arose within the 6 months before you took office, you will not be covered for disablement from this cause until 12 months after you took office. This is known as the “pre-existing conditions” clause.
• These are standard conditions that all the insurers will seek to apply. We are not able to negotiate more generous conditions from the insurers.

Do I need to provide evidence of good health?

If your potential monthly disability benefit exceeds R100 000 per month, the insurer will ask you to supply evidence of good health.

If you are unable to provide evidence of good health, your disability cover may be limited to R100 000 per month. (This limit may be revised from time to time – it is likely to increase, but it is also possible that it could be reduced if we cannot find an insurer willing to offer us such a high limit.)

For legal and tax reasons, the benefits that are described in this section cannot be provided directly by the Political Office-Bearers Pension Fund and are therefore not dealt with in the Fund Rules. Instead, these benefits are mainly provided by means of insurance policies that National Treasury arranges with various insurance companies for the benefit of political office-bearers (members of the Fund).

Parliament and some of the Provincial Legislatures have arranged accident cover for members. We do not have details of these arrangements and so they are not dealt with in this member guide. Similarly, we do not deal with Medical Aid benefits (Parmed) here.

Disclaimer

• The information in this guide does not constitute advice by either the Board of Trustees or its professional advisors. Members are encouraged to seek expert advice from a personal financial advisor before taking decisions regarding their benefits.
• The Fund will try to ensure that the material in this guide is up to date and accurate, but this cannot be guaranteed at all times.

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