1

INSTITUTIONAL ARRANGEMENTS REFORM PROPOSALS AND

DISCUSSIONS

National civil society consultation August 2008

2

Acknowledgement

This presentation is largely informed by the reform proposals outlined in the following discussion documents:

Creating our Future: Strategic Considerations for a Comprehensive System of Social Security (Social Security Branch, Department of Social Development, June 2008)

Concept design options for the Institutional Framework, Draft version 2, September (Department of Social Development, 2007)

Please note the proposals are not necessarily positions of the Black Sash.

3

A common body for Comprehensive Social Security

The Taylor Commission, Department of Social Development, Treasury and COSATU proposes a common administrative body of all social security funds in South Africa

4

THE CURRENT SITUATION

The existing social security system is fragmented and it consists of

A tax-financed grant system A social insurance scheme (the Unemployment Insurance Fund

(UIF) Private insurance arrangements: for pensions and health care, An under-funded public health system, Special pensions and health care schemes for public servants, Home Affairs Road Accident Fund (RAF) and An employer-financed fund for occupational accidents and

diseases (COIDA).

5

The rationale for a common interface body

According to the Department of Social Development

‘…the central rationale for the approach adopted is that the social security system should be considered holistically in respect of the value chain, governance, and regulatory considerations.’

6

Progressive principals of a common interface body

An common interface should;

Be coherent Be efficient, effective and sustainable Embrace both social assistance and social security benefits Operate with fairness and under consolidated legislation Perform social security administrative functions and not policy

functions

7

Proposal: Main functions of a common interface body

Enrolment with respect to all social security funds: National Social Security Fund (“NSSF”); SASSA; COID; RAF; Health; UIF etc.

Facilitate applications for enrolment. Support population registration currently performed by offices

of the Department of Home Affairs. Receiving, referring, and tracking complaint applications. Communicate with the public. Maintain a registry of members and beneficiaries. Pay social security benefits.

8

Proposal: Social Security Interface

The Department of Social Development proposes a single public interface entity (called for the time being) the Social Security Interface (SSI) as the common interface with the public the entire social security system.

The department expanded on three components for this body:

The value chain; The governance framework; and The regulatory framework.

9

Proposal: Value chain comprises of the following;

Public interface

Registry maintenance

Revenue collection

Management of entitlements

Financial management

Payment of benefits

10

Proposal: Public interface

The Social Security Interface (SSI) would operate with branch offices and local walk in centres (multi-purpose one stop shops) within walking distance for the entire population.

A call centre could be outsourced or run in-house.

An electronic interface along the lines of the current SARS e-filing system

11

Proposal: Public interface continued

SASSAHome Affairs

UIF NSSF

RAF

COID

Health

SARS

General Public

Social Security Interface

Social Security Registry

12

Proposal: Master Social Security Registry

A Master Social Security Registry (“MSSR”) will capture and contain all necessary personal information of applicants and beneficiaries.

Personal information will be used by all social security and related institutions.

Validation of the MSSR would occur every time a related

institution checked the personal information of an individual.

13

Proposal: Master Social Security Registry continued

Master Social Security Registry

COID

NSSF

SASSA

SARS

RAF

UIF

REF

Home Affairs

Car Licensing

SSI

Other Private

Health

GENERAL PUBLIC

GENERAL PUBLIC GENERAL PUBLIC

GENERAL PUBLIC

14

Proposal: Revenue collection

It is proposed that;

All social security contributions will be collected by SARS, including contributions for people falling below the tax threshold

Contribution funds will be pooled into one cross- cutting institution under a strict government governance arrangement

15

Proposal: Maintenance of entitlements and payment of benefits

It is proposed that;

Each scheme should adjudicate and pay its own benefits

Maintaining the functional focus of a particular social security arrangement and to keep them in separate institutions.

OR

For one institution to manage more than one social security arrangement e.g. social assistance and unemployment insurance

16

Proposal: Financial Management

Investment of funds occur through a cross-cutting institution which provides investment management to all the social security arrangements,

With the proviso that it is subject to strong oversight from stakeholders (e.g. social security arrangements) and independent board members.

17

Proposal: Governance and organizational structure

Each designated social security institution should be subject to the authority of a social security board (SSB).

Each SSB to be subject to the oversight of a single social security council (SSC) and report to the Minister responsible.

Policy decisions however remain within each social security institution and related minister and department.

The SSBs and SSC should be made up of even representation between affected groups, affected departments, and independent expertise appointed in their personal capacity.

18

Proposal: Governance and organizational structure component continued

Social Security Council

SASSA Board

NSSF Board UIF BoardMSSR Board

SSI BoardInvestment

Board

Executive Executive Executive Executive Executive Executive

19

In conclusion

This is a major policy moment.

As civil society, we need to engage vigorously at all policy levels to ensure an outcome for an institutional framework that is simple to understand and satisfactorily protect the public.