The Division of Social Growth not too long ago revealed a inexperienced paper on proposed social security and retirement reforms for public remark.
Whereas a lot of the main focus of the inexperienced paper has been on the introduction of a primary revenue grant and the formation of a Nationwide Security Fund (NSSF), the division has additionally proposed a number of new advantages for employees in South Africa, says skilled companies agency PwC.
“At this stage, the document has been released for discussion purposes only, and they have suggested a transition period of between five to ten years to align existing retirement funds with the NSSF,” the agency mentioned.
“No immediate action is required other than to be aware of what the Department of Social Development’s thinking is on this matter. We suggest that you take note and stay abreast of any further developments in this regard.”
PwC outlined a number of the key changes deliberate for employees that have not gained as a lot consideration because the revenue grant and social security fund.
1. Incapacity and survivor profit
If the employee turns into completely disabled, the employee will obtain an revenue primarily based on the wage on the time of the occasion or the final 12 months of employment.
If the employee dies earlier than retirement, revenue assist might be offered to every dependent primarily based on the employee’s wage and the variety of dependents.
Every little one might be paid out till they’re 25 years outdated.
The surviving partner might be paid a profit associated to the wage of the employee.
The advantages might be paid out as a month-to-month revenue stream and won’t be primarily based on the variety of years for which a employee has contributed to the NSSF.
2. Outlined profit pension fund for retirement
The employee will obtain a pension primarily based on a components that considers the lifetime wages, size of service and accrual date to find out the proportion of common earnings (restricted to the contribution ceiling) which the employee would obtain for yearly labored.
3. Unemployment insurance coverage
This can proceed to be credit-based, however credit will accrue at a sooner fee.
The UIF has additionally prolonged the profit for unemployed employees who stay unemployed after 238 credit score days have been exhausted. This might be value 20% of the employee’s revenue and final for a most of 4 months.
4. Funeral profit and delinking retirement contributions
A flat-rate funeral profit might be obtainable to employees.
An additional proposal is that consideration be given to changing the present tax deduction for retirement fund contributions with a tax credit score to delink the deduction’s worth to the employee’s contribution.