Privacy Policy
We use cookies to give you the best experience of our site. Please read our full privacy policy. close

Legal Disclaimer

This website specifically caters for fiduciaries, financial intermediaries or people working in institutional financial services industry.

By accepting the terms and conditions you confirm that you are a fiduciary, financial intermediary or work in the financial services or investments industry and require information regarding industry, economic or legislative updates, or information on Sanlam Investment’s products and solutions.

This website provides information on Sanlam Investments’ products, the markets and our services in general. This website is not intended for retail investors and we recommend that you seek financial advice from a financial advisor to conduct a proper financial needs analysis to ensure that our funds are suitable for your investment risk profile, financial needs and goals.

You may not reproduce, modify or create derivative works from, publish, distribute, transmit, display, license or transfer any of the content contained on this website, unless you have obtained our prior written authorisation. The website and all its content (text, graphics, icons, hyperlinks, private information and designs) are owned by or licensed to Sanlam. As such the intellectual property rights in the content on this site are protected against infringement by local and international legislation and treaties, and may not be used in any way without our or the licensor’s consent.


I ACCEPT I DO NOT ACCEPT

Regulatory Reform

Comprehensive Social Security in South Africa

Article Image

most popular news

De-risking and fiduciary duty

Rates on hold

Is sentiment the new fundamental?

Interest rates and asset classes
home »

Comprehensive Social Security in South Africa

Article Image
home »

Comprehensive Social Security in South Africa

08-12-2016

Article Image

A year ago, unions called for T-Day legislation to be scrapped or postponed. As a result the  measures  requiring  compulsory  annuitisation  for  provident  fund  members  was  postponed  to 1 March 2018 to give parties more time to consult. The consultation process has been slow and we understand that little progress has been made to date. One of the demands made by unions is that T-Day measures can only be considered in the context of holistic social security reform.

On 18 November 2016 the long-awaited discussion paper was released for comment. On closer scrutiny it appears that the report circulated dated back to March 2012. Commentators report that a subsequent paper produced in 2015, which contained more of a National Treasury influence, did not find favour. The fact that Government has taken so long to agree on the paper is indicative of the tensions and disagreement on the appropriate way forward.

What is the National Social Security Fund (NSSF)?

The central reform proposal is the introduction of a National Social Security Fund (NSSF), a centrally managed public fund to provide pensions, death and disability benefits and unemployment benefits. All employers and employees will be obliged to contribute at a combined rate of 12%, inclusive of a 2% UIF contribution, of qualifying earnings up to a ceiling that will be aligned with the UIF earnings threshold. This threshold was increased to R178 464 in 2015.

Impact on retirement funds

This will require that the first 12% of all workers’ retirement contributions on earnings up to the NSSF ceiling [R178 464] will go to the NSSF rather than to their present retirement funds. As a result, all these retirement funds will suffer a significant loss of business. In addition, they will henceforth be competing for supplementary savings over and above workers’ contributions to the NSSF. Bargaining council funds, with an average contribution rate of 12.9%, will be more affected than private-sector funds, whose average contribution rate is 15.8%t and who typically cater for higher-income earners.

This paper is now published for public comment. Government undertakes to engage stakeholders in an intensive consultation process to ensure that the proposals are right for the country as a whole. Consultation between social partners will be facilitated through a task team of the National Economic Development and Labour Council (Nedlac). The Inter-Departmental Task Team on Social Security and Retirement Reform (IDTT) will co-ordinate a series of consultative forums to ensure that the views of retirement fund members, organised labour, business and community groups are all heard.

Click here to read the full report.

Print Friendly

Leave a Reply

Your email address will not be published. Required fields are marked *

intelligence logo

Sign Up

  • Stay updated on local and global trends for informed investment decisions and optimal retirement outcomes.


2016 Award

Connect With Us

Twitter LinkedIn Soundcloud Soundcloud

most popular news

De-risking and fiduciary duty

Rates on hold

Is sentiment the new fundamental?

Interest rates and asset classes

Leave a Reply

Your email address will not be published. Required fields are marked *

Read This Next
rands
S&P downgrade: remember the rand debt is two notches above junk

Arthur Kamp, investment economist at Sanlam Investments Says Arthur Kamp, investment economist at Sanlam Investments, as fixated as we are...
Read More

X