Home / Trending / Parliament: Sassa’s surprise plan to deduct 10% from grants for funeral policies unearthed – Daily Maverick

Parliament: Sassa’s surprise plan to deduct 10% from grants for funeral policies unearthed – Daily Maverick

It was Sassa’s payment transition project manager, Zodwa Mvulane, in presenting feedback to the portfolio committee on the outcome of a workshop the agency held with the South African Post Office earlier this month, who appeared to skim over pages eight and nine of the report.

So much so that hardly anyone noticed or asked any questions when the time arrived and the announcement went seemingly unnoticed by committee members.

Page eight, titled “Identified functions which Sassa will manage”, listed as its third component the matter of “26A deductions” – or debits made from social grants by third parties.

From June 1, 2016, after Dlamini announced amendments to the Social Assistance Act of 2004, it became illegal for anyone to deduct money from the account of a Sassa beneficiary. The amendments were promulgated after thousands of complaints by grant recipients of deductions to accounts for airtime, micro-loans and electricity.

However, the new laws allowed only one deduction – for a funeral policy.

It now appears that it is this provision that Sassa is seeking to exploit in future. The law currently provides that only insurers registered under the Long-Term Insurance Act of 1998 may offer funeral policies to grant recipients. Only one deduction may be made not exceeding 10% of the value of the beneficiary’s grant.

On Wednesday Mvulane said, “Within the Sassa regulation, 10% of the grant amount can be capped for funeral cover. This time we want to do such deductions ourselves within Sassa and the process is well under way on this one,” said Mvulane. She remarked, “progress to date in relation to 26A deductions for funeral policy premiums, there is approval given for the procurement of the process, the project plan is there and in place. Also there are timelines that by September the payment file would have changed and Sassa would be doing this in-house.”

Mvulane said that an “initial engagement with a company has already started that will be assisting us to undertake the payroll deductions. Specifications for the interface are under way and business rules have been defined. This means that one way or another we have to work on tweaking the software.”

Quizzed by Daily Maverick about these plans, IFP committee member, Liezl Van Der Merwe – who was at the forefront of highlighting Sassa’s lack of planning for the takeover of grants from CPS earlier this year and which resulted later in a damning Constitutional Court judgment – said this was the first the committee heard of the planned move for Sassa to make funeral deductions itself.

It is interesting because the minister has said she wants to stop ALL deductions from grants. Now it appears as if they will be opening the door again to the exact thing that is currently happening. Sassa says it already has a company who will do these policies for them. Who is this company? How can you say you already have a company when you have not gone through the procurement process yet? It smacks of something that is going to be problematic again,” said Van der Merwe.

The DA’s committee member, Bridget Masango, also said this was the first time she had heard about the plans.

I am very uncomfortable about it,” Masango told Daily Maverick.

Sassa’s presentation to the committee on Wednesday came in the slipstream of a report by KPMG handed to the Constitutional Court on Monday that revealed that CPS Net-1 had made a R1-billion in profit over five years from its unlawful contract with Sassa.

While a seemingly conciliatory Dlamini attended Wednesday’s presentation, admitting that the department’s “culture had been to keep quiet” and that perhaps officials should be more responsive to the media in future, she did not face any questions with regard to CPS’s windfall.

In making its judgment on the CPS contract in March 2017, the Constitutional Court stated that CPS was prohibited from benefiting or profiting from the illegal deal with Sassa. It ordered the American-listed company to declare its profits, which KPMG did on Monday.

While the ConCourt did not order that these profits should be repaid, in a later communication with shareholders Net1 warned that it might still have to repay the amount as “one or more third parties may in the future institute litigation challenging our right to retain a portion of the amounts we will have received from Sassa under our contract. We cannot predict whether any such litigation will be instituted, or if it is, whether it would be successful.”

Sassa CEO Thokozani Magwaza on Wednesday, replying to a question with regard to the KMPG revelations said Sassa was not, at this point, concerned with this particular matter.

The ConCourt ruled that at the end of March 2018 we must get an independent organisation to scrutinise the financials of CPS and at that time all these things are going to be looked into. But as it is right now, we don’t worry ourselves with anything that is happening because the court has given us the way to be able to do what we are supposed to do when the time comes. We are concentrating in the interim on the phasing out of CPS,” he said.

Another issue aired at Wednesday’s presentation was a Pretoria High Court ruling on 9 May against an order by the Department of Social Development and Sassa to stop Net 1 from allowing illegal deductions from grant beneficiaries. Net1 contested Sassa’s application to stop the deductions.

The ruling by acting judge CJ van der Westhuizen appears to have disregarded the Constitutional Court’s 17 March ruling that information of grant beneficiaries must be respected and at present still enables CPS to continue to deduct money from social grants.

Van der Westhuizen had said that the case put forward by Sassa and DSD pivoted on the interpretation of new regulations 21 and 26A which relate to prohibiting all electronic debits, stop orders and electronic fund transfers from beneficiary accounts held at Net1 subsidiary, Grindrod.

Magwaza on Wednesday told committee members that Sassa would be appealing the High Court judgment which contradicted that of the ConCourt.

As far as we are concerned the ConCourt has given an order about this matter, then a judge in Pretoria comes up and gives different judgment which has put us into the state we are in now because we thought the ConCourt is the highest court in the land. We are concerned about it. If we don’t it means that CPS and the rest are in charge with regard to deductions.”

Earlier, Mvulane told committee members that following an engagement between Sassa and SAPO it had been agreed that while Sassa was building capacity, the processing of payments would be done through existing banks, SAPO and Sassa infrastructure. Sassa and SAPO would develop and host technology to capture and authenticate biometric fingerprint images in a secure environment.

SAPO could assist Sassa as it had extensive fixed branch infrastructure, was an SOE in compliance with the ICT White Paper approved by Cabinet, had the ability to expand its reach into rural areas, could provide grant recipients with a choice of payment options, and could provide Sassa with full access to the National Payment System through its Postbank division which currently had 5.7-million customer accounts.

Sassa, said Mvulane, would directly manage during the course of the 2017/18 financial year the opening up of a “control” or corporate bank account as well as special beneficiary accounts (ringfenced and for limited function).

When the money is transferred from Treasury to DSD it won’t have a long winding route as is happening currently. Whoever is Sassa’s service provider will have to plug into that control account,” she said.

She said now that Sassa and SAPO’s engagement had been finalised a procurement process would take place.

Come November 2017 the first new Sassa card will be issued,” said Magwaza, adding, “We do not want another CPS. We as Sassa will be part and parcel of the whole process. We are confident SAPO will deliver.”

Meanwhile committee member Liezl van der Merwe has said that Sassa’s announcement that it would be making funeral deductions “would definitely have to be interrogated further”. DM

Photo: Social Development Minister Bathabile Dlamini at the media briefing by Interministerial Committee on Immigration held at Tshedimosetso House in Hatfield, Pretoria. 2842015 Kopano Tlape GCIS


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