The SA Social Security Agency (Sassa) is gearing itself to take over the payment of social grants when the five-year contract worth R10 billion it awarded last week to Cash Paymaster Services expires in 2017.
The award is the first national contract the agency has made since its inception in 2006 when it inherited arrangements each of the provinces had negotiated with service providers.
These providers, including AllPay (a subsidiary of Absa), Cash Paymaster Services, and Empilweni Payout Services, will distribute R98bn in grants for the year ending March this year, of which the biggest chunks are for old age pensions (R37bn), child support (R36bn), and disability (R18bn). There are more than 15 million beneficiaries, but the number of transactions is 10 million because some recipients collect more than one grant.
AllPay operates in the Free State, Western Cape, Eastern Cape and Gauteng. Cash Paymaster operates in Limpopo, North West, KwaZulu-Natal, Northern Cape and Eastern Cape, while Empilweni does likewise in Mpumalanga.
Sassa CEO Virginia Petersen said on Friday the agency had begun the research and design of a new model for paying social grants. A key feature of the new model would be the range of options from which beneficiaries can choose how they would like to receive their payments. She would not provide additional details of the proposed model.
Petersen said the R10bn tender enabled Sassa to set, for the first time, national norms and standards for the distribution of social grants. “Norms and standards were not uniform. This is the first opportunity we have to standardise things.”
Costs per grant paid also varied across the provinces, ranging from R26 to R35. These will now be capped for the five-year duration of the contract at R16.50 per grant paid, enabling Sassa to save R3bn in operating costs during the five years.
Petersen explained that it was possible to cap the unit cost for Sassa because Cash Paymaster Services will have economies of scale. Other than the cost savings, the contract with Cash Paymaster means Sassa can project its expenditure with more certainty than has been the case thus far when each of the suppliers asked for increases based on changes to their own operating costs.
For grant recipients, the new deal, which comes into effect on April 1, will mean improvements in security of payments, the range of options available in terms of how to receive the payment as well as the assurance that all paypoints have water and sanitation.
Recipients will now no longer travel for longer than 5km to where they will receive their payments. She cited the case of recipients who pay between R80 and R120 in transport costs to travel from a rural area to town to receive their payments from a bank. “That is inconsiderate. As a caring government we had to change that,” she said.
Petersen added that Sassa will for now preserve the system of paypoints, which are like mini markets in some communities. The agency, however, will have to ensure that grant recipients, for example, do not feel crowded in at these paypoints by operators like mashonisas (loan sharks).
“Every pensioner in our country deserves the right to have options. Going to an ATM is an option. Going to a government hub where there is a machine for service is an option. For older citizens, we could try and get closer to them to ensure their security and safety.
“It does not matter how automated you are, it is about the options, the safety and security, the caring and convenience, that you provide. During the next five years we will continue to see paypoints.”
Cash Paymaster, a subsidiary of US-listed Net 1 UEPS Technologies, offered a biometric card which is underwritten by MasterCard, an arrangement which Petersen said widened the number of options available to grant recipients. The card can be used, for example, at any retail outlet that accepts MasterCard.
“Biometric safeguards the beneficiary,” Petersen said. “The beneficiary has to present the card plus a finger print. So, no one can take your card and go to a pay centre to get your payment. The beneficiary has a better sense of security.”
Sassa and Cash Paymaster Services are negotiating a service level agreement which will stipulate the norms and standards as well as the penalties should the supplier fail to live up to the norms and standards of the five-year contract. - Sunday Independent