The Department of Social Development says it is busy reworking its Green Paper on Comprehensive Social Security and Retirement Reform and will republish it at a later date.
It said it withdrew the paper to provide clarity on some of the matters it covers.
“Since its publication, there has been widespread commentary on the key recommendations entailed in the Green Paper,” the department stated.
“Some of the technical proposals were not well understood, and many have misrepresented the proposals, particularly the Social Security Fund.”
The statement from the department comes after social development minister Lindiwe Zulu withdrew the green paper in a Government Gazette posted late last night.
Published on 18 August, the paper proposed a substantial hike in income taxes to fund a universal basic income grant, and mandatory contributions to a state-run pension scheme.
It was met with heavy criticism from analysts, members of the public, and South Africa’s business community.
To fund the lowest level of its proposed universal basic income grant, the Department of Social Development said a 10-percentage point increase on income taxes would be needed to raise R200 billion.
According to the paper, this would allow a universal income for every South African at the food poverty line.
Stats SA most recently pegged the food poverty line at R585 per month.
For the state-run pension scheme, the paper called for a mandatory contribution of between 8% and 12% of worker salaries, up to a maximum of R2,760 per month.
The Department wishes to inform the public that it has withdrawn the Green Paper on comprehensive social security and retirement reforms. The decision to withdraw is provide better clarity on some of the matters entailed in the paper.
— Social Development (@The_DSD) September 1, 2021
Deputy finance minister David Masondo said that South Africa couldn’t afford it as we don’t have the economic growth of countries with working social security funds.
“We have to ask ourselves what are the preconditions for a social security grant proposed in these reforms,” said Masondo.
“As a country, we should sequence our current economic priorities, and we should not confuse our aspirations with what is possible economically.”
The Department of Social Development welcomed the level of public discourse on the discussion paper.
However, it said that it has also become apparent that there is confusion on some of the areas covered in the Green Paper that need clarification.
“This reinforces the fact that society should be involved in the policymaking space,” the department said.
“The Department expects to release the paper as soon as these issues have been addressed.”