Lindiwe Zulu Withdraws Plan to Have a Government Run Social Security Plan
- Lindiwe Zulu, Social Development Minister, has now vetoed the idea to have a government-run social security plan
- The Green Paper plan was gazetted on 18 August, 2021 without prior approval from Cabinet, according to reports
- Zulu did not provide any reasons for the withdrawal but it occurred on Tuesday, 31 August, just two weeks after it was gazetted
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DURBAN - Minister of Social Development Lindiwe Zulu has removed the controversial state-run social security plan. The proposal of the plan suggested that employees pay up to 12% of their salaries to the fund.
The Green Paper on Comprehensive Social Security and Retirement Reform (2021), as the fund is known, was published in mid-August. In a gazette published on Tuesday, 31 August, Zulu revealed that the fund had been withdrawn but did not provide any reasons why.
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According to a report by eNCA, the Green Paper Plan galvanised fierce opposition groups who threatened to fight the plan in court. TimesLIVE reported that the plan sets contributions that will be between 8% and 12% of their salaries. The ceiling of the earnings is R276 000 annually.
Fin24 published an article explaining that the idea of the National Security Fund may have supplied benefits to all South Africans in terms of unemployment, retirement and disability. The suggested plan could have had dire consequences surrounding South Africa's investments as savings would have been added to the fund.
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Treasury spoke with Fin24 where they confirmed that the Green Paper had not been approved by Cabinet but had still been gazetted.
State-managed pension fund could demand 12% of your earnings
When the plan was first proposed, Briefly News covered an explainer. The report stated that South Africans may in future be required to pay up to 12% of their salaries to a Government-backed fund. The Social Development Department revealed its recent Green Paper plan in which it describes why this would be done.
Who will pay and what is the earning bracket?
According to News24, all employees and employers will, in the beginning, be required to pay up to 12% of their money. The current salary ceiling is earnings of R276 000 per annum. If one earns this amount per year, they will pay a maximum of 12%. This equates to R33 100, or around R2 760 per month.
Those who earn less than R22 320 per annum will have a Government subsidy. This means that low-income workers will not have to contribute, however, a Government-backed annuity will be drawn up for them.
Source: Briefly News
