Old age test to be phased out

2013-02-27 15:22 - Sapa
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Minister of Finance Pravin Gordhan. ~ SAPA

Cape Town - All elderly people will be eligible for an old age grant regardless of income or assets, Finance Minister Pravin Gordhan said on Wednesday.

Tabling his 2013 Budget in the National Assembly, he told MPs: "It is... proposed that the old age grant means test should be phased out by 2016."

At present, a means test is used to check whether an applicant over the age of 60 is eligible for assistance from the state.

The test requires the applicant not earn more than R49 920 a year, and have assets worth not more than R831 600 if single.

If married, it requires a maximum combined income of R99 840 a year, and a combined asset value of not more than R1.7m.

Gordhan said that from 2016, "all citizens over a designated age will be eligible for the grant".

This would simplify its administration and "address the disincentive to save that arises from the present means test".

He also said it would prevent the exclusion of vulnerable individuals.

"Adjustments to personal income tax rebates will partially offset the costs of this reform, and will ensure that the overall incidence of tax and income support arrangements remains distributive."

To receive the grant, an applicant had to be a citizen or permanent resident, live in the country and not be cared for in any state institution.

As at September last year, 2.8 million people were receiving old age grants.

Gordhan said old age, war veteran, disability and care dependency grants would increase from R1 200 to R1 260 a month.

The foster care grant would increase from R770 to R800 a month.

The child support grant would increase to R290 in April this year, to R300 a month in October this year.

The Government Employees Pension Fund had remained fully funded despite the turmoil in financial markets in recent years.

A six percent increase in civil service pensions would be effected in April this year, he said.

According to the 2013 Budget Review, tabled on Wednesday, the social development department is looking at ways to improve income support for orphaned children who live with the relatives.

The aim is to finalise the development of such a policy by the end of the financial year.

The department's budget for the financial year would increase to R120bn.

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