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JOHANNESBURG - South African Social Security Agency (SASSA) is tightening the screws and reviewing its policy regarding funeral policy deductions on child support grants.
The social grants agency says its research has shown that such deductions may not be in the best interest of the child.
SASSA says as from January a moratorium has been imposed on practises such funeral policy deductions from child support grants.
Department of Social Development’s Brenton Van Vrede said, “SASSA has set up a recourse mechanism (for) people who have… debits for loans, airtime, who feel they did not sign up for these things.”
Current legislation allows monthly funeral policy payments to be deducted from social grants.
The department says the law was crafted to assist the elderly, but insurance companies found a profitable loophole.
Insurance companies started selling funeral insurance for children, which have a very low risk of dying. This meant that of the R330 paid out for a child, companies can take R30 directly from the agency.
Van Vrede said, “Because regulations are silent about which grants are allowed, certain companies of late have now begun to sell funeral policies to children, child support grant beneficiaries. That’s when the moratorium came into place.”
The moratorium has insurance companies up in arms. with more than R10 billion paid out in social grants each month, recipients have become a lucrative niche market for businesses.
The current legislation still governs old age grants. But the department of social development is reviewing the impact of deductions on those receiving child support grants – it’s trying to determine whether they are really in the best interests of the child.
One of the companies is challenging the restriction and is taking the case to the Constitutional Court.