Cape Town – It was a black Christmas for some pensioners who had substantial amounts docked off their grants to service debt from loan agencies.
These elderly folk usually receive up to R1500 through the South African Social Security Agency, which only allows for a maximum of 10 percent to be deducted for burial policies.
But loan agency Kuyasa Fund has been granting personal loans of up to R10 000, as per its adverts, to “citizens that are either on social grants or government pension”.
Yusuf Cassiem, a relative of one of the fund’s debtors, said they offered loans over 24-month periods with repayments of up to R750 a month – more than 60 percent of the grant.
A 72-year-old Sassa recipient from Pelican Park, who wished to remain anonymous, took a loan from Kuyasa Fund. His monthly repayments are R630.92, which leaves him with R849.08.
He lives with and supports his wife and four grandchildren. He said by the time he received his money, “there is barely anything left”.
“There was nothing special for Christmas, because we didn’t have the money.”
Another recipient, 66-year-old Mary Davids, said she had taken a loan in the middle of the year.
“I was told I would not pay too much. Now, when I get the money from Sassa, there is almost R700 gone. There is not very much I can do, so I have to take small loans to get by for the rest of the month,” she explained.
Davids said her loan was for R8000 and repayments, with interest, were to be paid back over 12 months.
She said she used the money “to help her granddaughter with things she needed for school and some food in the house, and then it was finished”.
When the elderly people asked if these deductions were legal, officials from the fund told them they were from government and it was fine to deduct money off the grant. Amendments made earlier this year to the regulations of the Social Assistance Act of 2004 prohibit deductions of more than 10 percent on Sassa accounts.
Sassa’s provincial senior manager: communications and marketing, Shivani Wahab, confirmed that “only one deduction is allowed, for a funeral policy. This amount may not exceed 10 percent of the value of the social grant”.
Other money-lenders, such as Moneyline, an online and cellphone-based service, came under fire, and in June Sassa laid criminal charges against its service providers, Grindrod Bank and Net1, for allegedly failing to comply with the amended law.
At the time, media reports said Sassa executive manager Dianne Dunkerley had confirmed that “a letter was sent to Net1 after the amended regulations were promulgated to make it clear deductions of any sort from the Sassa account were illegal.”
“We told them we expected them to comply. We spelt out what we needed them to comply with; that no deduction of any sort, be it airtime, prepaid electricity or loans, could come off a Sassa account.”
A Grindrod bank official, however, said the bank was only “responsible for the issuing of the cards and nothing more”. She said the bank had no authority over any deductions from the accounts.