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SOCIAL SECURITY AND RETIREMENT REFORM – WHAT CAN YOU EXPECT November 2011

SOCIAL SECURITY AND RETIREMENT REFORM – WHAT CAN YOU EXPECT November 2011. LATEST MODEL. According to Selwyn Jehoma Deputy- Director of Department of Social Development agreement has been reached on a number of issues around retirement reform (IRF Conference in September 2011). POSSIBLE MODEL.

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SOCIAL SECURITY AND RETIREMENT REFORM – WHAT CAN YOU EXPECT November 2011

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  1. SOCIAL SECURITY AND RETIREMENT REFORM – WHAT CAN YOU EXPECT November 2011

  2. LATEST MODEL • According to Selwyn Jehoma Deputy- Director of Department of Social Development agreement has been reached on a number of issues around retirement reform (IRF Conference in September 2011).

  3. POSSIBLE MODEL 3Tier Model: • Social Assistance • Social Security • Supplementary Savings

  4. SOCIAL ASSISTANCE • Social Old Age Grant Paid from general (SOAG) revenue - • Disability Grant removal of means • Child Support Grant test proposed • Foster Care Grant

  5. SOCIAL SECURITY • Unemployment Insurance (UIF) Contribution • Compensation for Occupational % unsure Injuries and Diseases • Partial funded Defined Contribution 12% of Benefit Fund R200 000 earnings • Disability and Survivor of which 4% is for Benefits risk

  6. SOCIAL SECURITY – Partial Funded Retirement Benefit • Mandatory contributions to partially fund a basic universal retirement benefit, designed to ensure a minimum level of income protection in old age over and above SOAG • Suggest target replacement ratio is 40% of R75 000 with a later 70% target • Suggest contribution rate of 12% • 4% of the 12% will be for risk cover – benefit not agreed • Will consider opt out if properly motivated • National State Fund

  7. SUPPLEMENTARY SAVINGS • Contributions between earnings floor and ceiling • Earnings floor – R200 000 • Earnings Ceiling – R888 000 • Defined Contribution Schemes • Accredited Retirement Funds • Tax incentives still unclear

  8. COMMITMENTS FROM GOVERNMENT • Accrued Savings will not be affected • No Compulsory transfer of accrued savings

  9. UNDECIDED MATTERS • The investment strategy • Management of the NSSF assets • The implementation sequence • Whether there should be a single Government department dealing with all aspects of pensions

  10. WHAT IS THE FIA DOING • Partnered with the FPI • Did survey & identified major concerns • Proposed focus areas

  11. SURVEY RESULTS • General mistrust of Government and their ability to manage and run a National Fund • Call to clearly establish the Role of the Intermediary in the proposed environment

  12. PROPOSED FOCUS AREAS • Discuss Role of Government • Tri parte agreement – between Business, Labour and Government regarding management • Clarify the Benefit of the Intermediary • Engage and partner with other organisations to influence on multiple levels

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