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SERVICES TO OLDER PERSONS

SERVICES TO OLDER PERSONS. PRESENTATION TO PORTFOLIO COMMITTEE Areas to Improve Services to Older Persons March 2014. PRESENTATION OUTLINE. PURPOSE OF THE PRESENTATION BACKGROUND SERVICES TO OLDER PERSONS OTHER BENEFITS

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SERVICES TO OLDER PERSONS

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  1. SERVICES TO OLDER PERSONS PRESENTATION TO PORTFOLIO COMMITTEEAreas to Improve Services to Older Persons March 2014

  2. PRESENTATION OUTLINE • PURPOSE OF THE PRESENTATION • BACKGROUND • SERVICES TO OLDER PERSONS • OTHER BENEFITS • WELFARE SERVICES IDENTIFIED AREAS TO IMPROVE SERVICES TO OLDER PERSONS • SOCIAL SECURITY POLICY AND INTERVENTION AREAS FOR OLDER PERSONS • CONCLUSION

  3. PURPOSE OF THE PRESENTATION To brief Portfolio Committee of the Services Provided to Older Persons and the Identified areas to improve services to older persons.

  4. Background • The Older Persons Act, 2006 envisages to deal effectively with the plight of older persons by establishing a framework aimed at the empowerment and protection of older persons and at the promotion and maintenance of their status, rights, well-being, safety and security. • Other main objects of the Act are to – - shift the emphasis from institutional care to community- based care in order to ensure that older persons remains in his or her home within the community for as long as possible; - regulate the registration, establishment and management of services and the establishment and management of residential facilities for older persons; and - combat the abuse of older persons.

  5. BACKGROUND….CONT. • The Department of Social Development (DSD) has a constitutional mandate to provide income support (Social Assistance) to those who do not have sufficient social security provision for old age. • The provision of social grants is guided by the Constitution of South Africa, National legislation and regulations, and various international instruments. • Various studies reveal that social grants, in particularly the Older Persons’ Grants (OPG), is one of the most effective strategies employed in minimising poverty. • Often, however, the grant is used to meet the needs of entire family (given the high rate of unemployment, and the lack of income support for all the unemployed).

  6. Services Provided to Older Persons • Prevention and Combat of Abuse, Neglect and Violence of Older Persons. - Promote and protect the rights of older persons, - Deal effectively with elder abuse • Shift from residential care and focus on community based services - Community Based Care and Support Services (CBCSS) • Safe environment and provision of quality life for frail older persons - Residential Care Facilities • Creating an Enabling and Supportive Environment - provides for opportunities of full development of potential and active participation of older persons on their issues • Awareness Campaigns and Access to Information to Older Persons and Communities

  7. Welfare Services Identified Areas to Improve Services to Older Persons

  8. Services Provided to Older Persons and the Identified areas to improve services to older persons

  9. Creating an Enabling and Supportive Environment (Cont…)

  10. Services Provided to Older Persons and the Identified areas to improve services to older persons.

  11. Services Provided to Older Persons and the Identified areas to improve services to older persons.

  12. Services Provided to Older Persons and the Identified areas to improve services to older persons.

  13. Services Provided to Older Persons and the Identified areas to improve services to older persons.

  14. Awareness Campaigns and Access to Information to Older Persons and Communities

  15. Amendment of the Older Persons Actand Training on Older Persons Act

  16. SOCIAL SECURITY POLICY AND INTERVENTION FOR OLDER PERSONS

  17. OPG – PROGRESS MADE Cont. Study on the Causes of Poverty in Old Age • The OPG plays an important role in poverty alleviation, • Many recipients previously worked as domestic, farm workers an other low income occupation, eaning less than R1 200 pre-retirement. • The grant serves as income security for many beneficiaries as the employment did not provide benefits such as pensions or provident funds. • Grants are mainly used to buy food for the entire family, and often to support larger households, particularly children. • The grant is also used pay health expenses for the family, regardless of free health care at public health care facilities. • Other expenditure cited by respondents include: DSTV, reduced license tariffs and municipal services, pocket money for grand children

  18. Current Policy Proposal • Universalisation of the Old Age Grant ~ R2.5bn to R9bn (can be designed to be tax neutral • Retirement Reforms ~ restructuring of intergenerational transfers • Main issue from the petition are the middle income earners who do not have an earnings related pension

  19. The commitment has been made to phasing out the means test… • The 2013 Budget Review commits government to establishing a: ‘universal old age grant [by] phasing out the means test by 2016’. • This will undoubtedly increase the costs of providing the old age grant and could provide excessive benefits to taxpayers, so in addition government proposed that: ‘adjustments to the secondary and tertiary rebates will be made to offset the costs of this change and retain broadly the same progressive tax structure’.

  20. The tax structure also provides support to the elderly… • A rebate decreases the tax liability that you owe SARS (after calculating your tax charge) • The rebates are higher for those over the age of 65 and again higher for those over the age of 75 • In effect, the rebates are an additional transfer of income from the Government to the elderly • There is already additional support for those over the age of 65 who have taxable income through the secondary and tertiary rebates • The examples on the right illustrate this additional support • Government is thus supporting the elderly who have little income through the old age grant and those on higher incomes through the additional rebates What about those who have incomes in the middle?

  21. … creating inequities and anomalies in the amount of support provided • The main point here is that the old age grant and the tax rebate should be seen as equivalent • If they are equivalent, then the level of support is uneven • As an example, for those over the age of 65 the level of combined support from the old age grant and tax rebate is shown in the graph on the left for different levels of taxable income • Persons with taxable incomes at around R50 000 would receive a lower Government transfer than someone with a taxable income of R40 000 or R60 000 • Currently, there is a greater amount of support to those with higher taxable incomes (R18 830 vs R15 120)

  22. Inadequacy of benefits • About a quarter of formally employed individuals have no access to retirement benefits; • These workers are either working for small employers or are contract workers; • Private provisions are often costly for these employees as they don’t benefit from cross subsidisation or cost sharing; • Retirement benefits are complex and often not portable; • There is little risk sharing and these benefits can sometimes be costly when it comes to risk benefits; • Retirees often have to buy annuities and they don’t understand the annuities market; • Individuals often do not preserve their retirement savings when they resign from their employers; • Most benefits are on a Defined Contribution arrangement; • These benefits are dependent on investment performance; • In case of low investment performance, retiree risk not having enough savings in retirement 1 3

  23. Provident funds and Annuities • Provident funds; • Provident funds pay a lump sum while pension funds pay monthly pensions; • Lump sum payments are usually consumed quickly leaving retirees in poverty once their funds are depleted; • Annuities • Annuities are often too expensive especially for women; • The longer one is expected to live the lower their monthly income; • Little understanding of annuities, the difference between living and life annuities is often not understood; • Living annuities are often depleted quickly as one is allowed to withdraw up to 17% of the fund in one year; • Life annuities generally pay lower amounts are guaranteed for a period it could be 10 years or it could be life; • Most people opt for living annuities and run out of funds quickly 1 3

  24. Means Tested Old Age Grant • The State Old Age Pension (SOAP) is means tested and asset tested; • Those with assets sometimes do not qualify for the grant; • Those with incomes above the threshold do not qualify for the grant; • The system is seen as rewarding those who do not save and penalise those who save; • Sometimes individuals “have to” draw down their savings in order to qualify for SOAP 1 3

  25. Challenges • Lack of support to working age – elderly need to support • Often children left with elderly (<20% of CSG) • Challenges with other service provision • Low – middle income dilemma • Absence of mandatory retirement provision • Fragmentation in delivery on Social Protection (NDP)

  26. Solutions currently proposed • Universalise Old Age pension; • Introduce a mandatory retirement system; • Have uniform benefits to allow for portability of benefits; • Increase preservation of funds; • Lower costs for annuities and have common rates for annuities; 1 3

  27. Conclusion • There are various programmes, policies and pieces of legislation that have been developed and implemented by government departments to deliver services to all age groups, including older persons. However, these services are not integrated, and do not always specifically target the needs of older persons. • There is a need to strengthen intersectoral collaboration through an integrated forum of key departments and stakeholders. • In terms of the Older Persons Act (Act 13 of 2006), each government department has a specific responsibility and role to play on the issues affecting older persons. This has not been forthcoming from some of the departments in the coordination and integration of service delivery. • The National Development Plan, in its reference to provision of social protection services to the most vulnerable members of society which include the older persons, also stresses that coordination is essential in the delivery of such services

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