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Selwyn Jehoma Social Security » History Industrialization Impact Most men became employees of firms – with social security coverage as from late 19th century This grew significantly after 1st and 2nd World Wars • Social Security is money, goods, services policies that any modern and decent society makes available to its citizens in order to ensure they make ends meet. • Social Assistance is a grant or an in-kind benefit paid for by the government from taxes • Social Insurance is a grant paid for from savings into a fund by those who have work employed • Private provision has grown in the absence of state provision or when state scales down • Parallel to social security, many AngloAmerican countries developed employee benefits schemes: – Savings and risk pooling schemes existed as far back as the 1850 – South Africa’s employee benefit schemes date back to date back to 1890’s for occupational injuries – Unemployment, maternity and sickness benefits came later in the 20’s • Proper social security lagged behind Child benefits family benefits Pension from state and/or contributions Disability or sickness benefits when work is interrupted complete school workers contribute: social insurance Where are we? 12,000,000 10,000,000 8,000,000 6,000,000 Old age pension and Disability CSG growth GDP share of all grants- from 1.5% to 3.4% 10,336,000 Partial coverage of pensions and others 4,000,000 2,000,000 150,366 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011* 2012* Is this affordable? 5 million tax payers? Future trends in Child Support Grant What should be done in SA? Middle and high income people Pillar 3 Improve Regulation Low and middle income Pillar 2: National Social Security Fund Oblige everyone to contribute towards: A national pension system, UIF, Accident and work injuries and diseases and health care Pillar 1: Social assistance for the poor 5/23/2017 Social Security and Retirement Reform IMC/IDTT 10 Implications 1. Not a threat but a diversification of risk 2. For current financial arrangement: – Provident funds will decline – Reduce financial flow 3. New challenges: – Depending on your place in the market, space for brokers will be reduced – Companies must innovate to compete for skills – Design new ways to become employer of choice Implications 1. A new balance will have to be found in the best interest of all – – – – – having more income security for A more inclusive society, a reduction of poverty, a reduction in equality, a more fair society, a more certain future for all