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Nedlac Bosberaad 15-16 March 2018

Nedlac Bosberaad 15-16 March 2018. Towards integrated and comprehensive social security. Social Security Reform. Chronology. 2002 : Taylor Commission on social security reform – DSD initiative (remember the Basic Income Grant)

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Nedlac Bosberaad 15-16 March 2018

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  1. Nedlac Bosberaad 15-16 March 2018 Towards integrated and comprehensive social security Social Security Reform

  2. Chronology • 2002: Taylor Commission on social security reform – DSD initiative (remember the Basic Income Grant) • 2004: Comprehensive social security and retirement reform initiative begins, led by NT • 2006: IDTT formed to unite various government departments • 2011/2: NT begins retirement industry reforms • 2014: June: Failed Nedlac engagement Sep: Cosatu publish demands for a comprehensive social security reform discussion and release of the IDTT paper Oct: Parliament approves suspension of retirement tax changes already passed into law for effect March 2015 • 2015: Non-release of IDTT paper raised with Deputy President by Labour at Nedlac Summit on 11 September. Bi-laterals begin. Matter proceeds to Parliament. • 2016: President signs into law retirement tax changes, but MoF announcing further consultation on preservation. Bill in Parliament postpones annuitisation. IDTT paper released to Nedlac 25 November. • 2017: Nedlac process begins in April. 2

  3. Nedlac Chronology 2017/18 • 4/4 : Presentation by government; tabling of TOR. • 13/6: Engagement with ILO. • 19/7: Engagement with Prof. Taylor. NMW presentation by business deferred. Discussion on research process. • 14/8: Constituency presentations on positions; NT on retirement reforms. • 13/9: Engagement on matrix begins. Business presents position on vulnerable workers. • 5/10: Continued engagement on matrix • 1/11: Continued engagement on matrix • 8/12: Continued engagement on matrix • 18/1: Engagement on retirement reform with NT. Extension of timeframe till end 2018 discussed. Research proposals approved. • 15-16/3 Bosberaad confirmed with Prof. Taylor. Programme finalised. 3

  4. Inter-Departmental Task Team Concerns 4

  5. So why a Nedlacbosberaad? • We are not sure everyone understands the IDTT proposals equivalently. • There is little opportunity for true dialogue during plenary. • Presentations are not a good way of conveying ideas at Nedlac. • We make good progress as a group when off the record. • Disagreement is easy, maximised consensus is what we are after. • Consensus building process • 28 February: Business pre-meetings • 5 March: Constituency dialogues with Prof. Taylor & Nedlac Research WG to meet with her to discuss positions and outcomes. • 15/16 programme of discussion off the record 5

  6. Different needs through time 6

  7. Our understanding of benefit structure 7

  8. 8

  9. Existing Framework Graphically: Retirement

  10. Existing Framework Graphically: Death

  11. Policy Priorities – Pillar 1 • Contributory implies employment link, broad alignment between contributions and benefits to all working residents • Consistent and standard treatment to protect against unknown risks (unemployment, injury on duty, road accidents) • Ensure access Robust simple system - manage anti selection (system does not always equal fund) and reward good claims management Questions to be answered: • Large scope for rationalization of benefits across needs here • Where does national insurance on equivalent basis make sense? • Must have line of sight in terms of funding (really don’t like RAF being funded through salary tax (UIF) • Participation rules need to be standardised (no Gov opt out, salary level discrimination)

  12. Policy Priorities – Pillar 2 • Efficient system • Tax benefits allows a degree of regulatory paternalism • Benefits must be directly linked to contribution as further incentive • Allow some element of flexibility – e.g. work based disability eligibility • Provide for known risks (retirement, dependants) Questions to be answered: • Standardization of a framework that allows flexibility • How create incentives to manage claims experience • Must cater for changing workforce and definitions of work

  13. Policy Priorities – Pillar 3 • Allow access to many players • Appropriately managed system • Little prescription to encourage participation • Strong regulation (TCF, RDR)

  14. Policy Priorities – Pillar 4 • Have we properly understood the social / family dynamic in providing for our elderly in society • Does any proposal erode the culture

  15. Problems in the System: Death

  16. Problems in the system: Unemployment

  17. Problems in the System : Retirement

  18. Short term solutions

  19. Current Proposal at Nedlac 22

  20. Why are we Nervous? 23

  21. 24

  22. 25

  23. 26

  24. 28

  25. 29

  26. 30

  27. These costs low as they have no asset charges on PAYG (but then does not consider impact on national debt costs 31

  28. Dealing with efficiency (World Bank: 2015) 32

  29. Business’ main concerns 33

  30. Howdo we move forward?

  31. How do we move forward?

  32. Conclusion Towards integrated and comprehensive social security

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