If two companies have their way, people who receive social grants could see deductions for funeral policies, airtime and electricity bills cut into those grants. Channel Life and Sanlam Developing Markets sought an interdict from the high court in Pretoria.
Their target? The department of social development and the South African Social Security Agency (Sassa), following the latter’s decision to put in place strict regulations pertaining to funeral policy deductions on social grants — particularly child support grants.
This came in the form of amendments to the Social Assistance Act on Friday, May 6, announced in a statement released by Social Development Minister Bathabile Dlamini, who hinted at the insurance companies’ opposition to the new amendments.
“Earlier this year, we published a set of regulations for public comments aimed at clarifying existing legislation in terms of what is legally permissible and the level of consent required for a deduction from a social grant. We received a flood of comments from the financial services industry asking us why we are doing this. Why do we want to restrict people’s rights to choice? Why are we going against the goals of financial inclusion and creating access to financial products for low-income earners?”
On Tuesday, Channel Life’s legal team asked the court for a postponement, saying their client needed time to consider its options in light of the new amendments. A new court date has still to be confirmed.
The new regulations have in effect placed a moratorium on all deductions from social grants, including funeral policies, airtime and electricity bills. They also prohibit any deductions that exceed 10% of the grant.
The amendment to Regulation 26A of the Act stipulates that deductions may not be made on child support grants, foster child grants, care dependency grants and social grants that have been in effect for less than 12 months. It also requires beneficiaries of these grants to consent to the deduction in writing and submit the consent in person to Sassa.
Sassa amended the Act after it had received more than 1 000 complaints from social grant beneficiaries.
Human rights organisation the Black Sash, which has been advocating for the grants beneficiaries, says many of the beneficiaries weren’t aware that they had authorised any deductions. In other cases, people were either manipulated or misled, and did not understand what they had agreed to.
The Black Sash was part of the ministerial task team that looked into the matter and had also applied to be a friend of the high court in the matter between the two insurance companies and government. The organisation says there is “an urgent need for a ‘clean-up process’ of the social grant deductions” — a process Sassa began in September 2015.
“Any reduction in the amount of the social grant has significant negative impacts on [the social grant beneficiaries’] ability to survive and provide survival for their families,” the organisation said in its application to be admitted as a friend of the court.
Another insurance company, Lion of Africa, will appear in court for the same matter on May 26.