RAF is technically insolvent

2013-09-28 00:00

CAPE TOWN — The Road Accident Fund (RAF) is technically insolvent, with liabilities of R51 billion more than its assets.

Accident victims and their families are having to wait ever longer to be paid out by the fund, sometimes years.

An investigation by sister paper Beeld found that at the end of the financial year in March 2013, the RAF had 280 000 arrear claims on its books. In 2012, this figure was 265 000 and in 2011, 245 000.

The DA’s Greg Krumbock points out that R51 billion is almost 10% of South Africa’s annual budget.

Legal costs are a heavy burden on the the fund.

Transport Minister Dipuo Peters said in answer to a parliamentary question that 10 years ago, the fund paid out R516 million in legal costs. Last year, that figure was R2,35 billion.

In 2003, she said, the fund paid out R2,4 billion to claimants. Last year, the pay-outs totalled R11,3 billion.

RAF spokesperson Linda Rulashe maintained the fund can meet its liabilities, but didn’t deny the high burden, which she ascribed to actuarial projections.

“Last year, the fund paid out R15 billion on 227 000 claims.”

However, the National Treasury is concerned.

Spokesperson Jabulani Sikhakhane said the outstanding liabilities have arisen over many years. He said they are a function of the compensation scheme currently mandated by law.

“The cabinet has just approved a new compensation scheme that will control liabilities,” he said.

He confirmed that already approved claims will have to be covered.

Rulashe said the fund does not need a cash injection, and has reserves of R6 billion.

Last year, the fund received R17,3 billion from fuel levies, which stood at 88c a litre.

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