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 3 Tier Model: Social Assistance Social Security Supplementary Savings

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

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

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 R 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

SUPPLEMENTARY SAVINGS Contributions between earnings floor and ceiling Earnings floor – R Earnings Ceiling – R Defined Contribution Schemes Accredited Retirement Funds Tax incentives still unclear

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

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

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

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

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