Cape Town — The South African government aims to introduce a new social insurance system, financed by social security taxes, President Thabo Mbeki announced today.
In the most important new initiative announced in his annual "State of the Nation" address at the opening of Parliament, Mbeki said the government was exploring the introduction of a system "informed by the principle of social solidarity".
Although 11 million of South Africa's estimated 47 million people already receive one or other form of social grant, the system provides minimal state pensions for the elderly.
"The contributory earnings-related pillar of our social security system is missing or unreliable for large numbers of working people," Mbeki said. "Over and above social assistance provided through the government budget, we need to explore the introduction of an earnings-related contributory social security system…"
The minimum benefits paid under the current system would be retained, the president said, but the new system would provide for retirement savings and death, disability and unemployment benefits. It could also include a wage subsidy for low-wage employees, especially those beginning their first jobs.
"This will mean that all South Africans will enjoy membership of a common, administratively efficient social insurance system, while those earning higher incomes will be able to continue contributing to private retirement and insurance schemes," he added.
