The battle for old-age grant equality

Battle lines have been drawn between the government and a group of individuals who are petitioning the Pretoria High Court to recognise their right to receive the state old age grant at the same age as women. At present, women receive the state old age pension from the age of 60, while men have to wait a further five years before benefiting.

The Pretoria High Court has allowed two days to hear Roberts versus the Minister of Social Development and the first arguments will be heard this morning. The motion is based on the basic right to social security and equality as enshrined in the constitution.

An interesting debate

The court petition is being supported by the Centre for Applied Legal Studies of the University of the Witwatersrand and the Community Law Centre of the University of the Western Cape (represented by the Public Interest Law Department at Webber Wentzel Bowens), who have been recognised as friends of the court.

Although a number of arguments exist in support of a lower retirement age for women, current practice appears to counter the principle of fairness and equality. Should government be forced to level the playing field, it will be faced with the massive cost of adding thousands of men to an already stretched social security budget. Will government be able to counter the potential financial blow by moving the retirement age of women higher? The consensus is that a dilution of the existing retirement rights would be totally unacceptable.

The timing of this case is appropriate in that government and various stakeholders in the financial services industry are already engaged in finding a solution to South Africa's retirement provision shortfalls. We have frequently referred to recommendations made by Treasury in previous newsletters. Perhaps it would be easier for judges to decide this case once the reform process is complete. Whatever the outcome, we can certainly expect a different pension fund environment in South Africa five years from now.

Another spanner in the retirement reform works

While this case unfolds in the Pretoria High Court, the Department of Social Affairs has released a series of feasibility studies titled "Reform of Retirement Fund Provisions." The document presents the Department's view of how South Africa's national social security system might work.

In the introduction to this report, Minister for Social Development, Dr Zola Skweyiya, states: "This discussion document is aimed at ensuring that as our discussions progress we will be imbued with the commitment to collective policy formulation, be loyal to universality, dedicated to a compulsory system, and have the assurance of a consensus style of decision-making."

Skweyiya also mentions the five principles which constitute the foundation of their pension fund reform ideas. These are:

1.  The extension of coverage to all members of the population.
2.  Protection against poverty in old age, during disability or on death of the wage earner for all members of the population.
3.  Provision of an income, and replacement of lost earnings as a result of voluntary or involuntary retirement for all those who have contributed.
4.  Adjustment of this income to take account of inflation and, at least to some extent, of the general rise in living standards.
5.  Creation of an environment for the development of additional voluntary provisions for retirement income.

Regular FAnews Online readers will notice that these principles are not too far removed from those enshrined in National Treasury's main discussion papers, Social Security and Retirement Reform (second discussion paper) and Retirement Fund Reform (first discussion paper).

Still waiting for action

The Social Development report runs to 196 pages and makes reference to dozens of documents already produced on the topic of retirement and retirement fund reforms. If anything, South Africa already has a wealth of research papers on this topic.

National Treasury, the Department of Social Development, the Department of Labour, Statistics SA, independent consultant Rob Rusconi and the World Bank have all contributed to the furthering of the pension reform discussion. And another paper from Treasury is still in the pipeline. The question is how to ensure that the good intentions espoused in these many discussion papers eventually find their way into a workable pension fund solution.

South Africa is in danger of entrenching itself as a 'talker' rather than a 'doer'. It is high time the pension reforms move from the realm of discussion documents to the physical world of implementation. If not, we will still be discussing possible solutions when the first proposed implementation deadline arrives in 2010.

Editor's thoughts:
Do you think there is a requirement to level the pension playing field and pay men and women at the same age? And should this equalisation be reached by lowering the age at which men receive the state pension, or raising the age at which women start receiving it? Send your comments to [email protected]