Post Office to pay out grants

2011-03-12 18:00

The Supreme Court of Appeal will save government ­almost R2?billion per year by ­ruling that the Post Office, and not a private company, will pay out ­social grants in future.

The court on Friday upheld an appeal by the South African Social Security Agency (Sassa), which administers state grants and ­pensions, and the Post Office, against a judgment by the ­Johannesburg High Court.

The high court ruled in favour of Cash Paymaster Services, the company that has been paying social grants since 2006, that the agency had to go on tender instead of appointing the Post Office.

But this was overturned by the Supreme Court, which ruled that it was in the interest of the poor for the Post Office to administer grant payments.

The judgment has been ­welcomed by the advocacy group the Black Sash, which said that reduced administration costs meant there would be more money available to pay beneficiaries.

“We are encouraged by the court’s decision. We would like to see the Post Office becoming an efficient vehicle for the payment of grants to poor people,” said Black Sash’s Ratula Beukman.

Since April 2006, Sassa has been using Cash Paymaster ­Services to administer pensions and grants to 3.6 million beneficiaries in five provinces.

In July 2009, Sassa signed a “letter of agreement” with the Post Office in terms of which they would help beneficiaries open Postbank accounts and pay their grants into them.

The Post Office also agreed to provide beneficiaries with ­additional services including a free mini-statement, an Mzansi bank card and two free ATM ­withdrawals each month.

Cash Paymaster, however, went to court to stop the deal, arguing that it was illegal for Sassa to sign an agreement with the Post Office without a competitive process.

The Post Office system, ­according to Judge Zukisa Tshiqi’s judgment handed down on behalf of a full bench, was much cheaper.

Sassa contributed more than R900 000 to the Post Office’s startup costs, R13.68 for each new account and a monthly fee of R14.98 per beneficiary.

Describing the financial benefit to Sassa of the shift as “substantial”, Tshiqi said Cash Paymaster and other contractors charged Sassa R32.11 per transaction, more than double the Post Office fee.

The Cash Paymaster system, she said, costs R3.6 billion per year for nine million beneficiaries, “more than double” the Post ­Office fee.

Tshiqi added that she was ­“unfortunately left with a lingering impression” that Cash ­Paymaster challenged the deal to “perpetuate the expensive cash payment system” and not to compete with the Post ­Office.

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions. publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24


Rugby World Cup 2015

All the action from the 2015 RWC, including live coverage of all 48 matches, breaking news, fixtures, results, logs - and much more!


Rugby World Cup 2015

Boks take ‘no mercy’ approach
Burger to equal Bok RWC record
Japan victory attracts record TV figures
iPads the secret to Japanese RWC success
Traffic Alerts

It is time to focus on your daily rhythm. Are you putting too much attention on future projects and neglecting the day to more

There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.