SA vows to protect grant recipients from insurers

Social Development Minister Bathabile Dlamini. File picture: Department of Communications

Social Development Minister Bathabile Dlamini. File picture: Department of Communications

Published May 6, 2016

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Johannesburg - South Africa’s Minister for Social Development Bathabile Dlamini announced measures to protect welfare recipients from companies selling services, including funeral insurance policies for children.

No payments to brokers selling funeral policies will be allowed, she said. Other deductions for services such as mobile phone airtime, which is illegal, will be stopped, she said.

Read: Funeral cover: SA plans to end sales to the poorest

The new regulations mean that companies, including Sanlam and Lion of Africa Assurance Company, cannot directly deduct money from social grants recipients’ welfare accounts without written permission provided directly to the welfare agency, Dlamini told reporters in Cape Town on Friday.

Companies directly accessing welfare grants are “eroding the whole aim of fighting poverty, because the grants are about fighting poverty,” Dlamini said. “We are appalled that the industry doesn’t see this as a problem.”

The government pays welfare to about 16.9 million people as part of an attempt to make up for the poverty and inequality created by apartheid rule. The government has recorded more than 13 000 disputes between social grant recipients and companies making such deductions. More than three-quarters were resolved in the beneficiaries’ favour, Dlamini said.

The law currently allows deductions from social grants for a single funeral insurance policy amounting to a maximum of 10 percent of the grant.

“The beneficiaries should receive the full value of the grant unencumbered,” Dlamini said. “It is very easy to take the money of social grant beneficiaries without proper consent and controls.”

BLOOMBERG

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