State pension scheme details soon

South Africans will soon know the details of the proposed mandatory state pension scheme and how it will affect taxpayers’ pockets.

Yesterday, Social Development Minister Bathabile Dlamini said her department would move “with determination and speed” to introduce the retirement fund with the view to provide a decent basic income during retirement, or in the event of a disability or for survivors in the event of the death of the breadwinner.

Dlamini said almost a third of employed South Africans had made no provision for retirement, relying almost entirely on the social assistance programme.

The proposed scheme will in effect mean an obligatory contribution to a state fund, with private pension provisions remaining an optional extra - similar to the controversial national health insurance.

Proposals for this, alongside other social security reforms, were approved by ministers in February and are being prepared for submission to the cabinet.

In February, Social Development deputy director-general Selwyn Jehoma said: “The Treasury is looking at how the impact of such a tax contribution (to a mandatory state pension) could be mitigated.”

Yesterday, director-general of Social Development Vusi Madonsela said an inter-ministerial committee was working on a consolidated document which detailed the proposals dealing with social assistance and social insurance and would soon be presented to the cabinet and later to relevant stakeholders.

The public would know about the contents of the document in about two months. He said there was a call for the old-age grant to be a basic uniform coverage of all people who reach retirement age.

“We also need to cultivate a culture of saving in the country,” he said.

Madonsela said people (earning) above a certain threshold would be required to contribute to the scheme, to ensure a basic social protection floor for everyone.

“We are also looking at a range of risk benefits like dependents’ and disability benefits,” he said.

The private sector would also play a role and the government would seek to get buy-in from everyone, not only in the industry but also ordinary people.

Madonsela told Independent Newspapers: “People’s salvation at the moment tends to come with the death of someone who had life insurance. It shouldn’t be like that. We are looking at a system where you live knowing you have your own savings, and through solidarity with others in employment, that will take care of you at a later stage.”

Meanwhile, the department is also planning to recruit retired social workers to boost the social work force.

Dlamini said a national consultative workshop would be held to discuss with retired social workers the possibility of them re-entering the profession. “We want to bring them back into the profession to serve as mentors to the young generation of social workers. I am convinced that veteran social workers who possess decades of experience still have enough energy and passion that can help to inspire the younger generation of social work professionals.” - Pretoria News