The recession over the past year has highlighted the need for reforms to the social insurance system, and the government is considering raising the income replacement rate used by the Unemployment Insurance Fund (UIF), the Budget Review says.
As a percentage of your final wage or salary, UIF benefits range from 58 percent for low-income earners, to 38 percent for high-income earners (people who earn R12 748 a month or more).
Selwyn Jehoma, the deputy director-general of the Department of Social Development, says raising the income replacement rate can be accomplished by:
- Increasing the amount of the UIF benefit, which is a percentage of the last salary you were paid before you started to claim UIF benefits;
- Increasing the period over which you can claim benefits; or
- A combination of the above.
Data from the UIF show that the recession has resulted in more people remaining unemployed for longer periods and that the number of higher-income claimants has increased.
The government will cast the social security net wider this year by extending the child support grant to children aged 18 (up from 16) and the old-age pension to men aged 60 (the qualifying age last year was 61). Women already qualify to receive an old-age pension from age 60.
The number of children who receive a child support grant is expected to increase from 9.1 million in December last year to 11.5 million in March 2013.
In his Budget speech, Finance Minister Pravin Gordhan says he recognises that the R10 increase in the child support grant is slightly below inflation, but the cost of extending the grant to two million more children means that the government has to adjust the grant more moderately.
Caregivers now have to ensure that children who receive grants attend school. Proof of school enrolment, along with school reports, will have to be submitted regularly to the Department of Social Development. If the social development department finds that a recipient is not attending school, the department will not necessarily cut off the grant but will send a social worker to investigate and ensure that the child does attend school.
The money allocated to child support grants is R1.3 billion this year, R3.1 billion in 2011/12 and R5 billion in 2012/13.
The amount allocated to old-age pensions, R34 billion, will consume most of the expenditure on social grants this year. It is expected to increase to R39.9 billion in 2012/13.
From April, social grants will increase as follows:
- Old-age pension - by R70, from R1 010 to R1 080;
- Disability grant - by R70, from R1 010 to R1 080;
- Child support grant - by R10, from R240 to R250;
- Foster-care grant - by R30, from R680 to R710;
- Care dependency grant - by R70, from R1 010 to R1 080;
- War veterans' grant - by R70, from R1 030 to R1 100; and
- Grant-in-aid - by R10, from R240 to R250.
Road accident fund
The Budget includes a proposal by the Department of Transport for the adoption of a no-fault claims system for the Road Accident Fund (RAF). If the proposal is accepted, the RAF will provide benefits to more victims of road accidents, because it will remove the common law requirement that you must prove that an accident was not your fault when you claim from the fund. However, the RAF will pay you out for more serious injuries only.