SSL2601 ASS 2 - a The financing of social security in South Africa Social security schemes are either contributory or non \u2013 contributory Non \u2013

SSL2601 ASS 2 - a The financing of social security in...

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a. The financing of social security in South Africa Social security schemes are either contributory or non contributory. Non contributory schemes take the form of social assistance arrangements which are funded by government through tax revenue. A means test is applied to determine if the applicant for social assistance qualifies to receive the grant. Social insurance, on the other hand, is financed through contributions made by people who work so that they are eligible for benefits during periods when they cannot work because of, for example, ill health, disability, unemployment or old age. Contributions are made by both employer and employee. The employer deduct a contribution from each employee ’s wages. These contributions are then transferred to a special fund as a type of insurance premium to protect the employee against a possible risk. The amount of contributions and benefits payable are generally determined by the rules of each fund.

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