South Africa is unique in having a reasonably healthy voluntary pension fund
industry with higher coverage of employed people than many leading economies
-- but no state involvement in providing universal retirement
benefits. However, the government is looking to create a compulsory earnings-related
social security system that will include retirement benefits for all citizens.
Judged by the World Bank's 'multi-pillar' approach to
pension provision, South Africa has the first and
third pillars -- the welfare-based old-age pension
and private savings. The second pillar, which the
government wishes to build, will require employed citizens to contribute to
a state fund, which will give them a
minimum benefit on retirement, along British lines. This is is driven
by the state's growing burden of support for the elderly. Establishing a second
pillar would take the pressure off the social old- age pension system. Although
about 50% of employed people belong to a pension fund, many do not save enough,
or cash in retirement funds when moving jobs. Many work for small companies
without pension funds or earn too little for their own retirement provision.
Although the government wishes to ensure adequate savings on retirement
and provide for cross-subsidization, it remains unlikely that it would end tax
benefits on voluntary savings as a way of boosting social pensions However,
the government may phase in changes over time and introduce a cap on tax deductions,
as in Britain. In South Africa, a similar system already applies to the tax
treatment of medical aid contributions. It is unlikely
that the government would force all citizens to invest their full pension
in a single fund, and will offer a choice, as in other countries. While people
could still contribute to private schemes, every citizen was likely to be compelled
to fund the state's social security scheme, either by a specific allocation
of part of their retirement funding contributions, or by cross-subsidisation
through differential taxation.
Currently an employee with a provident fund can
cash in his or her full fund on retirement. The payout is taxed, but in contrast
with pension funds, the purchase of an annuity is not legally required. It is
possible that the government might introduce measures requiring provident
fund members to purchase annuities on retirement. The next step would be to
prevent employees from gaining access to their pension or provident funds until
retirement. This issue sparked strikes in the 1980s, and is still a particularly
sensitive issue for trade unions, which believe workers should have access to
their pension contributions to deal with life crises
Useful Address
Injuries and Diseases
When workers die as a result of occupational injuries or diseases, their dependants
can claim compensation. The Basic
Guide to Compensation for Occupational Fatalities explains how such compensation
is determined. In addition, the Compensation
for Occupational Injuries and Diseases Act provides compensation for workplace
accidents or illnesses caused by hazardous workplace conditions. The following
is a summary condensed from the Department of Labour website.
The Compensation for Occupational Injuries and Diseases Act applies to:
- all employers; and
- casual and full-time workers who, as a result of a workplace accident or
work-related disease:
- are injured, disabled, or killed; or
- become ill.
This excludes
- workers who are totally or partially disabled for less than 3 days
- domestic workers
- anyone receiving military training
- members of -
- the South African National Defence Force
- the South African Police Service
- any worker guilty of wilful misconduct, unless they are seriously disabled
or killed
- anyone employed outside the Republic of South Africa
(RSA) for 12 or more continuous months; and
- workers working mainly outside the RSA and only temporarily employed in
the RSA
Lump Sum Payments
A lump sum is paid when permanent disablement is 30% or less.
The formula for 30% is:
15 X worker's pay (up to
a maximum of less than 30% calculated proportionally) X degree of disablement
÷ 30.
Pension Payments
Pension is paid when the degree of permanent disablement is between
31% and 100%.
The formula is: 75% of worker's pay
X degree of disablement ÷ 100.
Based on Legislation in Section
49 of the Compensation for Occupational Injuries and Diseases Act
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