National Treasury yet to assess how social security fund will affect taxpayer, says finance minister
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Cape Town - An impact analysis on how the proposed social security fund will affect taxpayers has not yet been conducted, says Finance Minister Enoch Godongwana.
Last week, Social Development Minister Lindiwe Zulu withdrew the green paper which was gazetted on August 18.
Implementing the proposal would mean that all South Africans earning above a certain income would have to pay between 8% and 12% of their salary into the fund. The fund would be used to pay social and pension grants to citizens.
The department, however, noted that the proposal would be gazetted again, once certain aspects were addressed.
In response to a parliamentary question by the DA’s Dion George, Godongwana said his department had not specifically modelled the impact of the creation of the National Social Security Fund (NSSF) as the proposal had not been adopted by the government.
He, however, noted the department had been part of discussions at the government, business and labour negotiating chamber, Nedlac, towards the long-term aspirational objective for a more comprehensive social security system.
“The NSSF is one policy option toward this long-term aspirational objective. For the short- to medium-term, National Treasury has been focusing on retirement reforms to improve coverage, reduce costs, consolidate the number of funds drastically to under 50 or even 10, and to promote greater preservation,” Godongwana said.
“We are also focused on the many vulnerable workers who are not in any retirement scheme, and are considering a default fund for such workers, who do not have access to occupational retirement funds.”
The proposed security fund has received much backlash over recent weeks, with some saying taxpayers are overburdened.
Meanwhile, Cosatu and the South African Federation of Trade Unions share the view that the proposed social security fund would benefit workers in the formal and informal sectors.