South Africa widens social security net

23 February 2011

Old age and disability grants as well as child support grants will increase from April, Finance Minister Pravin Gordhan told Parliament on Wednesday, adding that a more integrated social security system was being developed in order to reduce administration costs.

Delivering his Budget speech in Cape Town, Gordhan said that the state’s old age and disability grants would rise by between R20 and R60 to up to R1 160 a month, while the child support grant would increase from R250 to R260 in April.

Gordhan said revisions were also proposed in the means test threshold, which would benefit households with modest incomes that reduced their grant entitlement.

Mandatory basic retirement plan

Close to 15-million South Africans receive state social grants, and the number is expected to increase as an extension is made to the child support grant to cater for older children.

The government projects that the country’s social security budget will grow from R132-billion in the next year to R146.9-billion the following year and up to R171-billion by 2014.

“Social protection also includes unemployment insurance, occupational injury and the Road Accident Fund,” Gordhan said. “Proposals are now well advanced for the alignment and consolidation of these social security arrangements, together with the introduction of a mandatory basic retirement plan.”

Fragmented social security system

Gordhan said that over R9-billion a year was currently spent on administering the country’s “fragmented” social security system, saying a better coordinated system would offer better protection to vulnerable households.

Over the next three years, the South African Social Security Agency (SASSA) will receive R870-million for the implementation of a new grants application process that the government hopes will reduce waiting times and reduce fraud.

Indications are that over the past year SASSA reduced its deficit from R884-million to a projected R460-million, and it is hoped that the agency will clear its operating deficit in the next financial year.

Research shows that strong increases in South Africa’s social protection budget have enabled income support to poor households to be extended sustainably over the past decade, mainly through expansion of the child support grant.

While the country’s economy continues to grow, the government acknowledges that the economic climate remains challenging and that employment has not yet recovered.

Source: BuaNews