POLL | Would you pay 12% of your salary into a government social security fund?

The government has proposed implementing a compulsory pension and insurance system that will see employers and employees paying a percentage of their earnings into a state-run national social security fund (NSSF).

Social development minister Lindiwe Zulu published the proposals in a green paper on Wednesday.

The contributions will be between 8% and 12% of earnings and the proposed fund is based on “social security principles of risk pooling and social solidarity”.

The green paper also proposes that employees earning below an income threshold of R22,320 per year should not be obliged to contribute to the NSSF for retirement or risk benefits but will continue to contribute to the Unemployment Insurance Fund (UIF).

Members of the public have until December 10 to comment on the proposal.

Zulu said the absence of a statutory arrangement providing pensions and insurance was the most notable gap in SA’s social security system.

“Although private occupational and voluntary schemes partially fill this gap, some 6.2-million formal sector workers — primarily low-income earners, informal workers and informal sector workers — are excluded from such arrangements,” said Zulu.

The paper states the NSSF would provide pensions to formal, informal, and self-employed workers who reach retirement, disability benefits to those who are physically unable to work, and survivor benefits to their dependants should they not live until retirement.

“Contributions to the pension and risk benefit components of the NSSF will be pooled, sharing risk across all contributors,” it said.

Zulu notes those who live long beyond their salary-earning years need an adequate income in retirement, but those who die young require assurance that their dependants will be provided for.

“Those who suffer accidental injuries and lose their capacity to work need a replacement income (and in some cases compensation), while those who lose their jobs through the vagaries of economic and industrial trends need to be assisted in finding alternative work and meeting interim income needs.”