In September 2021, The South African Department of Social Development withdrew its Green Paper on Comprehensive Social Security and Retirement Reform.
The paper proposed to introduce a government-run social security fund that would have allowed people to receive retirement, survivor, disability and/or unemployment benefits. Contributions would have been based on a person’s income and wealth, with different bands and benefits provided accordingly.

But the government gazetted the green paper to “provide better clarity on some of the matters entailed [in it]” as 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.

International Adviser spoke to Holborn Assets and Overseas Trust and Pension to discuss how the social reforms will impact high net worth taxpayers and the South Africa pensions market.

Necessity?

The original plans for the proposed social security system was originally going to be made up of four tiers:

• Tier 1 will be available to everyone and will be non-contributory;
• Tier 2 will be mandatory with contributions up to a certain threshold and will pay out retirement, death and disability benefits;
• Tier 3 will be phased in via an auto-enrolment model providing approved retirement funds benefits, including annuities; and,
• Tier 4 will be voluntary with contributions securing private savings and insurance benefits.

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