President Jacob Zuma said the proposed National Social Security Fund will, once approved, help workers make regular social security contributions while they are still working to avoid falling into poverty in the event of retirement or disability.
He said it will operate as a national fund responsible for administering mandatory contributions from all workers for the provision of retirement, death and disability benefits.
The proposals under the fund are still being discussed by social partners at National Economic Development and Labour Council (Nedlac).
“All income earners will be required to participate, and this will foster social solidarity and the sharing of risks among all workers.
“Furthermore, the fund will provide an income to the dependants of all contributors, who happen to die before retirement.
“The benefits will be defined benefits, where benefits are guaranteed in order to protect contributors and foster social solidarity,” he said.
Zuma said those who earn low incomes will be supported through a contribution subsidy to reduce the burden on their disposable income.
“The benefit design of the fund is crucial for the protection of vulnerable workers in our country.
“At present, the existing retirement benefit schemes are based on defined contributions, rather than defined benefits. This means that the contributors have no guarantee of how much their benefits will be and they face the risk of losing their savings in the event of poor market performance.
“In contrast, the Fund will carry the risk of poor investment performance on behalf of individual contributors, and thus provide assurance of a guaranteed benefit to all workers and their households.”
South Africa Today – South Africa News
