Plans under way to replace Cash Paymaster Services as grants payer
The Post Office has undergone due diligence by the Council for Scientific and Industrial Research, to see if it can be used to pay grants
The Department of Social Development has started putting systems in place to replace Cash Paymaster Services (CPS) as the payer of social grants.
The department was ordered to have a new system in place by April after its contract with CPS was ruled invalid‚ but it ignored the Constitutional Court order.
A second court case and judgment in March ordered the department to ensure that it had a new payment system in place.
This could save billions of rand as CPS wanted R4.7bn for a two-year contract‚ according to court papers.
Social Development Minister Bathabile Dlamini told the media on Friday that the department had done the following to replace CPS:
• The Post Office had undergone due diligence by the Council for Scientific and Industrial Research, to see if it can be used to pay grants. Due diligence is an assessment of the Post Office’s capabilities‚ strengths‚ weaknesses‚ debt and assets. The outcome of the assessment and how the Post Office can support grant payments will be announced next week‚ said Dlamini.
• The South Africa Social Security Agency (Sassa) was opening a new bank account for the monthly R10bn that is paid in grants, with support from the Treasury and South African Reserve Bank. This will enable it pay grant recipients directly from its own account.
• It was taking over management of grant deductions. CPS provided information of its grant recipients to its sister companies‚ which then sold funeral and other policies to them. These deductions meant beneficiaries’ grants were reduced. Even children had funeral policies deducted from child grants.
Sassa says it has upgraded software to detect whether problems with the policy deductions. It wants to ensure no policy deducts more than 10% of the grant value; it is now illegal to do so.
• The list of the estimated 2-million beneficiaries who have private bank accounts will be provided this month‚ which means Sassa will be able to pay grants directly into their banks accounts by March.
It currently pays the grant money into the CPS bank account and CPS pays this into the bank accounts of recipients. Taking over payments into beneficiaries’ accounts from CPS will remove the need for a third party.
• It is rolling out a biometric system so that beneficiaries will use their fingerprints for identity. This will be implemented over three years and will be used to decrease fraud and people claiming grants that did not belong to them.