When the Department of Social Development (DSD) released its Green Paper on Comprehensive Social Security and Retirement Reforms, the proposal to set up a national pension scheme was swiftly shot down.

The Green Paper proposed a National Social Security Fund to which all workers earning over R1,667 a month would contribute. Employers and employees would initially contribute between 8% and 12% of earnings up to a ceiling of R23,000 a month.

Such was the force of the opposition that there was no debate about whether South Africa’s pensions system is working. Even Minister of Social Development Lindiwe Zulu did not defend the proposals. Instead, the DSD swiftly withdrew the paper, promising to return it later for public comment.

“Some of the technical aspects of the proposals were not well understood and many have misrepresented the proposals, particularly on the National Social Security Fund. It has become apparent that some of these areas need further clarification to avoid any further confusion,” said the 1 September statement issued by Lumka Oliphant, spokesperson for the DSD. And so the public debate on pensions reform died before it could begin.

Yet South Africa’s pensions system is broken and unfair.

If you were a South African who was precisely average, on reaching 65, the age of mandatory retirement, every month you would receive 17% of the average monthly income, before tax, you earned while you were working. This is called the replacement rate.

Read more @Daily Maverick