Tag: government

South Africans to pay 12% of earnings into fund

By Helena Wasserman for News24

South Africans may be required to contribute up to 12% of their earnings to a new government-backed fund, according to new proposal from the Department of Social Development.

On Wednesday, it gazetted its Green Paper on Comprehensive Social Security and Retirement Reform, which proposes the creation of a new National Social Security Fund (NSSF) – a government-managed fund which will provide retirement, disability benefits and unemployment benefits.

All employers and employees will initially be obliged to contribute up to 12% of qualifying earnings – up to a ceiling, which is currently proposed as R276 000 per year. In effect, this means South Africans will pay up to R2 700 a month to the fund.

The first 10% of this contribution will go to the mandatory fund, rather than to a retirement fund. The next 2% will go towards unemployment insurance.

Higher-income workers are expected also to contribute to traditional pension funds.

The paper proposed that government should subsidise the contributions of low-income workers. Those who earn less than R22 320 per year won’t have to contribute, but a government-backed annuity product will be designed for them.

“A simplified contribution arrangement for self-employed individuals and informal workers will also be established,” the paper states.

The green paper expects that workers who earn higher incomes will “divide contributions” between the NSSF and private-sector funds.

The NSSF pensions will be based on career earnings and the duration of contributions. The disability and survivor benefits will be based on salary at the time of injury or death. The NSSF will also pay a flat-rate funeral benefit, and provide income protection benefits for all workers and their families.

“However, those earning above the tax threshold will need to contribute to supplementary retirement savings and insurance arrangements to ensure an adequate replacement income.”

The paper proposes automatic enrolment to encourage workers to contribute to supplementary retirement and insurance arrangements.

Interested persons and organisations are invited to submit comments on the paper by 10 December.

Other proposals in the Green Paper include:

A universal income grant to the working age population

The Green Paper suggests that a basic income grant should be launched at a level “that will at least lift the individual out of poverty”.

It also favours a universal grant instead of one that is means tested.

“Administratively, it is a lot easier for SARS [SA Revenue Service] to recoup the grant paid to a wealthy individual with a technical adjustment to the tax brackets than for Sassa [SA Social Security Agency] to interview millions of applicants to determine whether the applicant qualifies based on income. A universal grant is therefore potentially more efficient, cost effective and better targeted resulting in fewer exclusions,” the paper says.

“The key benefit of universal benefits is that it promotes social solidarity and buy-in to the system; and it is administratively much simpler to administer with fewer exclusion challenges. It reduces stigma of the poor and discontent amongst the wealthy who feel that they are the ones funding the system.”

It says that the country’s tax system is “significantly more advanced” than Sassa, “hence relying on the tax agency ability to test income is likely to be a lot more effective than through Social Security Agency.”

“It will also be much easier to implement a reform that will require a significant adjustment to taxes as it willbe easier for government to sell an increase in taxes on the working age population with an increased transfer to that same population.”

Regulatory reform of the pensions and life insurance industry

Higher-income workers will be encouraged through tax incentives to contribute to pension and insurance plans, in addition to the NSSF.

But the new paper proposes a new framework to approve funds which can qualify for these tax incentives. One of the proposed qualifying criteria is that they meet certain cost-efficiency standards, including caps on fees.

“Such funds will need to meet stringent standards of care, prudence, governance, fiduciary responsibility, transparency and control of costs.”

“Proposals for an individual retirement funds framework include portability with no early termination penalties; greater product standardisation and disclosure; limited charge structures; and stronger investment regulation, including limitations on individual investment choice.”

The paper was critical about the costs associated with certain retirement products, imprudent investments and poor governance and administration – which all reduce the value of a worker’s lifetime savings.

The extension of UIF benefits

Currently, the Unemployment Insurance Fund provides unemployment benefits for up to eight months at a replacement rate of between 38% and 60%, depending on a worker’s salary. Credits are accrued at a rate of one day for every six worked.

The paper proposes that credits will be accrued at a rate of one day for every four days worked and the long-term unemployed will receive a continuation benefit.

This means that workers who have exhausted their full UIF benefits, will be paid at a lower rate to protect workers from having to draw down their retirement savings.

Road Accident Benefit Scheme

The proposed scheme will replace the current Road Accident Fund, and provide income replacement benefits on a similar basis to the Compensation Fund, with the benefit dependent on the injured worker’s capacity to earn. It has not yet been decided what assessment tool will be used.

Means test phased out

It is proposed that the means tests for social grants be phased out through the alignment of social assistance with the structure of personal income tax rebates.

The objective is that all dependent children, the disabled and the elderly should be eligible for a grant, regardless of their income or assets. For families with incomes above the tax threshold, tax rebates will replace social assistance entitlements.

The department said that the green paper’s recommendations will take several years to implement, and that a phased-in implementation approach is proposed.

 

By Edwin Ntshidi for EWN

Talks between public sector unions and government have deadlocked.

This comes after marathon talks between state negotiators and the Public Servants Association (PSA).

The association, one of the largest parties at the Public Service Coordinating Bargaining Council, tabled a wage demand of over 7% – with government saying it cannot afford the demand.

Government proposed a 0% increase but has been willing to talk.

The PSA and government negotiators met until late last night in an attempt to avert a strike that could see over 200,000 government workers downing tools.

However, the parties could not find each other as the association’s Ruben Maleka elaborates.

“It is regrettable that last night we could not find each other with the employer. The employer would not revise its offer of 0%.”

Wage negotiations stalled after the government did not accede to public servants’ wage demand of CPI plus 4%.

Instead, the government said the demands are out of sync with the Fiscal Framework.

With talks now deadlocked, this paves a way for unions to declare a dispute.

Should the strike go ahead, it will result in public servants in the public sector embarking on industrial action while the country faces the COVID-19 health crisis.

What will happen next?

  • Unions are finalising declaring a dispute after the deadlock
  • Then the matter will be conciliated
  • Should that fail, unions can apply for a strike certificate

Earlier in the week, Public Service and Public Administration Minister Senzo Mchunu described this year’s wage talks as “the most difficult negotiations” the country has ever faced.

He urged government and labour representatives to put the public service first and not treat each other as adversaries.

The bad state of the economy, the COVID-19 pandemic and the need for drastic changes in the public service are just some of the reasons Mchunu listed as factors that have made this year’s talks the most difficult.

National Treasury aims to cut about R300 billion from the public wage bill in the next three years as it becomes ever more apparent that government cannot afford to foot the bill as the pressure on the fiscus increases.

However, trade unions are equally under pressure to appease their members who have gone without wage adjustments in the past year.

 

By Hanno Labuschagne for MyBroadband

Around 35% of senior managers in government do not have the necessary qualifications or credentials for their position.

This was revealed by the Minister of Public Service and Administration Senzo Mchunu in a written response to a parliamentary question posed by the Democratic Alliance.

Senior managers in South African government require at least an NQF Level 7 qualification, which is equal to a Bachelor’s Degree or Advanced Diploma.

According to information captured in government’s Personal and Salary System (PERSAL) as of 15 February 2021, however, there were no records of such qualifications for 3 301 of the 9 477 senior managers in the public service.

  • 5 447 of government’s senior managers operated at national level
  • 1 987 did not have a record of a suitable qualification
  • The largest number of those were in the police department, which accounted for 228 unqualified senior managers
  • The Department of Agriculture, Land Reform, and Rural Development follows with 227
  • The Department of Justice and Constitutional Development has 189
  • 1 314 out of 4 028 senior managers at provincial government departments did not have the required qualifications
  • Gauteng accounted for the highest number among the provinces, with 381 senior managers lacking the necessary qualifications for their jobs – the largest number of these were in the Health department
  • KwaZulu-Natal has 246 unqualified senior managers
  • The Eastern Cape has 185 unqualified senior managers

By Jamie McKane for MyBroadband

The government has launched its online vaccine registration platform for citizens, called the Electronic Vaccine Data System (EVDS).

Using this system, South Africans who qualify for phase 1 of the national vaccine rollout plan can register online for a COVID-19 vaccine using either their ID number or passport.

This system was announced by the Department of Health last week, with the department’s COO Milani Wolmarans explaining that the EVDS is linked to supply chain management to ensure that there are enough doses to inoculate the vaccines when they arrive at the local vaccination service site.

In order to get an appointment for a COVID-19 vaccination, users will have to register on this platform, which will be available on mobile devices and desktops.

Registering for a vaccination
In the first phase of the COVID-19 vaccine roll out only medical healthcare workers will be allowed to register, with the portal requiring users to enter their occupation, employer, whether they are patient-facing, and medical aid information before proceeding.

Those who qualify will be sent a notification through SMS informing them of the time and place that the vaccine will be available. It will also come with a unique code that patients will be required to show to their vaccinator.

The registration portal notes that registering online for a vaccine does not guarantee that you will receive one.

It also states that “eligibility of the vaccine will be determined by the National Department of Health based on priority population groups”.

The department added that information submitted through the vaccination portal will be used for the following:

  • Identifying eligible vaccination beneficiaries
  • Planning supply of vaccines and ancillary items
  • Allocating beneficiaries to their nearest available service point
  • Communicating with enrolled individuals about the vaccination programme
  • It is expected that the vaccine registration portal will be opened up to broader population groups once the national vaccine rollout plan has progressed

Currently, the national plan for COVID-19 vaccination comprises the following priority phases:

  • Phase 1: Frontline and healthcare workers.
  • Phase 2: Essential workers, institutionalised persons, and the elderly.
  • Phase 3: The remaining adult population.

South Africans who are eligible to receive a COVID-19 vaccine during phase 1 can register on the EVDS self-registration portal.

Source: MyBroadband

The Department of Environment, Forestry and Fisheries (DEFF) says it has revoked a section 30A directive granted to Karpowership SA Pty Ltd for activities linked to the emergency generation of electricity.

When the company had initially submitted its request, it had indicated that the country’s electricity supply was under threat because of the increased pressure on the healthcare system as a result of the COVID-19 outbreak.

The motivation for the request was to ensure an uninterrupted supply of energy to the healthcare sector, something which Eskom was unable to guarantee.

The department verbally approved the request on 26 June 2020. Following receipt of confirmation that all environmental requirements would be met, the directive was confirmed in writing on 6 July 2020.

“It has subsequently emerged that the company had applied for the verbal directive in advance, in preparation for the possible implementation of the government’s integrated resources plan and in the event that the company would be selected as an emergency power producer.

“However, this information was not disclosed to the department when the company motivated for the verbal directive to be issued for the Section 30A activities, which are, in essence, an emergency provision,” the Department of Environment, Forestry and Fisheries said in a statement.

“In light of the fact that it has now emerged that there was in fact no emergency situation, the department has withdrawn the verbal authorisation and subsequent written directive for the commencement of activities listed in terms of Section 30A of the National Environmental Management Act on 13 August 2020,” the department said.

The company has since accepted the notice and indicated that it does not intend to challenge the department’s decision to revoke the verbal directive.

 

Telkom loses special BEE status

Altron has won a major court victory against Telkom and its subsidiary BCX in a tiff about the telecommunications company’s controversial black economic empowerment (BEE) status.

Rob Davies, minister of trade and industry in 2019, declared Telkom as a BEE Facilitator.

The BEE legislation makes provision for organs of state to be declared BEE Facilitators, and the effect is that such an organ of state will then be regarded as 100% black-owned, even if it is not.

Altron and other businesses objected to this on the basis that Telkom, and more specifically, BCX, will obtain an uncompetitive edge over private businesses that compete with it if the application succeeds.

In spite of the objections, Davies approved the application and granted Telkom BEE Facilitator status at the beginning of May 2019.

Strangely, although Telkom brought the application, the final decision of the minister reads that the BEE Facilitator status is granted to government, represented by the Office of the Presidency, in respect of government’s 40.5% shareholding in Telkom.

Altron was of the view that the minister’s decision was flawed, both from a procedural and substantive perspective, and it decided to take the minister’s decision on review to the High Court.

MTN joined Altron in the application, with the minister, Telkom and BCX opposing the application.

Chris Potgieter, Altron group executive for legal, following the ruling: “Altron took a decision to take this matter on review because we believe that the minister’s decision to grant the BEE Facilitator status was procedurally and substantively wrong and was contrary to the spirit of the BEE Codes.

“The result of the BEE Facilitator status approval was that Telkom and its BCX subsidiary obtained an unfair advantage over their business competitors through the resultant increase in Telkom’s and especially BCX’s BEE levels, without them having to take the corporate actions and having to incur the costs which other companies have to do in order to improve their BEE status.”

According to Potgieter, MTN joined Altron in the review application and Vodacom was mentioned as it, as a telco, had a vested interest in the matter.

“Altron welcomes the judgment as it shows that government is bound to follow fair and correct procedures and it takes away the unfair competitive advantage that Telkom and BCX obtained,” he says.

Meanwhile, Telkom tells ITWeb: “In compliance with the decision by the Gauteng High Court to set aside the minister of trade and industry’s decision to grant facilitator status to the government in respect of the government shares in Telkom SA, Telkom and certain of its subsidiaries have included the impact of the judgment in their revised B-BBEE certificates.”

Where required, it says, other subsidiaries have applied for re-verification of existing certificates.

“Telkom is pleased that the court’s decision will not be implemented retrospectively. In setting aside the minister’s decision, the court said the ruling will not affect the B-BBEE status of Telkom and its subsidiaries for the purposes of any tender or contract awarded and/or concluded after 7 May 2019 and before the judgment date (8 July 2020).”

According to Telkom, tenders and contracts concluded during this period will retain the facilitator status until the end of the terms of these contracts.

SA to miss tax target by over R300bn

By Lameez Omarjee for Fin24

SA will miss its original tax revenue target by over R300-billion this year, said Finance Minister Tito Mboweni.

During the tabling of the special adjustment budget on Wednesday, the minister explained that the country is already behind its 2020/21 tax revenue target by R35.3 billion. As a result, government has revised down the tax revenue target from R1.43 trillion to R1.12 trillion.

National Treasury recorded a R63.3 billion revenue shortfall in the 2019/20 tax year.

“We expect to miss our tax target for this year by over R300 billion,” Mboweni said.

While Mboweni did not announce any tax hikes to make up the shortfall, he said that tax measures of R40 billion would be needed over the next four years. Tax proposals will be announced in the 2021 budget.

Furthermore Treasury will work to find spending adjustments of R230 billion over the next two years.

He also touted the idea of zero-based budgeting. “This means that we will try to reduce all expenditure that we thought we can no longer afford. After all, we are not as rich as we were ten years ago,” Mboweni said.

Analysts had expected the budget to reveal a significant shortfall as a result of the lockdown which restricted economic activity and by extension tax revenue collections.

To cushion the blows of the lockdown on consumers and businesses, government implemented a R500 billion stimulus package, which included R70 billion in tax relief measures. These entailed deferrals on some tax payments such as excise duties, carbon tax and employee taxes. Government also opted to postpone tax proposals for corporate tax hikes and SARS was directed to fast track VAT refunds. Donations to the Solidarity Fund, set up to support the vulnerable in society, were also declared tax deductible.

A ban on cigarette and alcohol sales also had negative implications for excise duty collections. Back in April SARS Commissioner Edward Kieswetter said these restrictions saw a loss of R1.5 billion in excise duties. The minister has also been outspoken about his opposition to the ban on these items.

Bernard Sacks, tax partner at Mazars, noted that certain sectors of the economy had still not been able to restart operations, while some others are operating to a limited extent.

“The difficulties faced by Minister Mboweni are now immeasurably greater. Ways must be found to fund the steep rise in healthcare spending… Social grant spending will show steep increases as the unemployment rate soars even higher,” Sacks said.

By Edward West for IOL

In just over a month since the R200 billion Covid-19 Loan Guarantee scheme to help small and medium sized businesses was launched, only R7-billion has been paid out – according to figures from the SA Banking Association (Basa) released yesterday.

The scheme, managed by the banks on behalf of National Treasury and the SA Reserve Bank (SARB), allows qualifying companies to apply for loans from their primary bank to fund three months operating costs, such as salaries, rent and supplier payments.

Economic commentators have criticised the scheme, arguing in particular that banks have applied normal risk vetting procedures for the loans, which were too stringent considering the plight many small businesses found themselves in and the uncertain trading environment in the future.

For instance, financial intelligence and research firm Intellidex noted on Wednesday: “The R200bn guaranteed loan scheme is a crucial centrepiece of “phase two” of the economic response to the Covid-19 crisis and is now one month old. Take-up, however, has been low.”

Basa said yesterday that the banks had approved just more than R7 billion in loans for 4 800 small businesses, since the scheme was launched mid-May.

Basa said, however, they expect the approval amount to grow as the number of applications for loans continues to increase. As at June 6, banks had received 29 700 applications for the loans.

The banks had rejected some 5 200 applications as they did not meet the eligibility criteria, as set out by National Treasury and the SARB.

Five thousand two hundred applications were also declined because they did not meet bank risk criteria.

However, about 14 100 applications were still being assessed, while 200 loans were approved, but not taken up by the applicants, Basa said.

Basa said the Covid-19 loan scheme was a commercial arrangement and required a credit approval process, to ensure that banks did not lend recklessly and to protect the fiscus,

“Business owners may be required to sign surety, based on individual bank credit processes.

In addition to the Loan Guarantee Scheme, in the two weeks to June 6, Bas members approved another R2bn in voluntary debt relief to individual customers experiencing financial distress due to the pandemic.

This brought the cumulative relief offered by banks since they started assisting individuals with targeted relief, to R16.5bn.

In the two weeks to June 6, the banks also provided additional cash flow relief, including payment breaks, to commercial and small and medium enterprises worth R1.4bn. This brought the cumulative assistance offered by banks to commercial and small and medium enterprises to R11.7bn.

Of the 131 600 applications received for relief from commercial and small and medium enterprises, more than 124 400 had already received assistance, Basa said

The cumulative assistance offered to individuals and commercial and small and medium enterprises businesses amounted to R28.2bn.

Source: eNCA

The COVID-19 lockdown alert Levels 3 and 4 have been declared invalid and unconstitutional.

The High Court in Pretoria has handed down this judgment.

The court, however, suspended the declaration of invalidity for a period of 14 days.

Government has noted the decision and says the Level 3 regulations remain in operation for now.

The court has directed Cooperative Governance and Traditional Affairs Minister Nkosazana Dlamini-Zuma to amend and republish the regulations.

It says the regulations should guarantee the rights enshrined in the Bill of Rights.

Liberty Fighters Network had taken government to court, arguing the rules are unconstitutional.

Cabinet says it’ll make a statement once it’s fully studied the judgment.

By Nozipho Mngomezulu, Karl Blom and Jody Hardy at Webber Wentzel

In a move to counter “fake news”, all Internet sites ending with “.za” will have to include a visible link on their landing page to the Covid-19 South African Online Portal, in terms of a Government Gazette notice published by the minister of communications and digital technologies on 26 March 2020.

This applies to all websites operating under the .zaDNA top-level domain name, so it includes those ending with “co.za”, “org.za” and “ac.za”.

The requirement is contained in the Electronic Communications, Postal and Broadcasting Directions, under Regulation 10(8) of the regulations made under section 27(2) of the Disaster Management Act, 57 of 2002.

The purpose of this directive is to disseminate and facilitate the availability of accurate information about Covid-19.

The Covid-19 South African Online Portal contains statistics on the spread of the virus, information on symptoms and preventative tips, and official press releases and notices.

Although the directions came into force on the date of publication, they do not prescribe any penalties for non-compliance, or a deadline by when websites must be updated.

The portal to be displayed is found here.

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