Michael Marchant | Daily Maverick | 8 May 2020 |
In the context of a strained fiscus and a dysfunctional social security agency – freeing up private assets that are owed to poor and vulnerable individuals could also go a long way to supporting the increase in social welfare grants. It is in this context that the roughly R43-billion owed to just under 5 million people, many of them grant beneficiaries, should be viewed.
The now-viral video of the Centurion food parcel queue that snaked 4km was a stunning and sobering visual reminder that the Covid-19 pandemic is devastating to millions of South Africans. The people in that queue represent a small portion of the millions of South Africans who do not have enough food and have lost income due to the closure of large parts of the formal and informal economies.
As the state scrambles to find the money needed to address the unfolding crisis, it is a cruel irony that right now, over R40-billion in pension benefits languish in the accounts of corporate administrators and remain unpaid to millions of pensioners and pension fund members.
The failure of pension fund trustees, fund administrators and the state regulator to ensure that beneficiaries are traced and paid has been well documented by Open Secrets and the Unpaid Benefit Campaign (UBC). The implication of this failure for vulnerable beneficiaries is made even starker by the current crisis.
The reality is that food parcels, important as they are, are not sustainable economic relief. Long-term food security is one of many socio-economic concerns for South Africa. Moreover, the logistical problems with procurement and distribution as well as the evidence of corrupt councillors abusing the system and harming the most vulnerable make it clear that getting cash into people’s hands quickly is essential.
The government’s decision to heed the advice of civil society and progressive economists to increase the child support grant by R500 per month was an important victory, though quickly undermined by the government’s indication that this increase will be per caregiver and not per child. Twelve civil society organisations have thus rightly urged the government to reconsider and ensure that the increase is per child, and to consider raising other welfare grants.
Yet in the context of a strained fiscus and a dysfunctional social security agency – freeing up private assets that are owed to poor and vulnerable individuals could also go a long way to supporting the increase in social welfare grants. It is in this context that the roughly R43-billion owed to just under 5 million people, many of them grant beneficiaries, should be viewed.
South Africans are not dependent on state pensions alone – consider that over 15 million people are members of over 5,000 privately administered pension funds. For many, like contract cleaners and private security guards, participation in a pension fund is made compulsory by a bargaining council agreement. This means that employed South Africans from all walks of life have a portion deducted from their salaries every month in the hope that their pension will support them and their families in their old age. Recent new data on extreme wealth inequality in South Africa reveals that pension assets are an important source of wealth for a remarkably wide range of people with different levels of income and wealth.
The grave injustice, however, is that despite contributing a portion of their salary to a pension fund, often for many years, many people may not receive their pension when they retire, move jobs, or lose their jobs. The most recent data released by the Financial Sector Conduct Authority (FSCA) – the independent state-funded regulator responsible for regulating private pension funds – confirms that R43-billion (this R43-billion does not include unclaimed benefits in the separately regulated Government Employees Pension Fund), in so-called “unclaimed benefits” are owed to just under five million people.