“Despite the more generous benefits payments mandated by the Unemployment Insurance Amendment Bill” the Fund keeps accumulating surplus. By fiscal year 2013/14, the Fund had an accumulated surplus of R72.3 billion and a net asset position of R90.4 billion. It is expected that an estimated R51.8 billion will be added to its accumulated surplus over the medium term says Funekile Mathebula, Assistant Manager for Tax at EY

The figures are a clear indication of the imbalance between contributions and the benefits covered under the UIF. To correct this, National Treasury will be drafting proposed legislative amendments to improve the current range of UIF benefits. The proposed amendments intend to include public servants as beneficiaries of UIF benefits. However, a fine balance will need to be attained so as not to enlarge the government’s wage bill or contribute to further surplus.

While the proposed amendments are still in the planning stages, there will be a temporary drop in the contributions income threshold from R14 872 to R1 000 resulting in maximum monthly contributions of R10 per employee. This drop in contributions will have no effect on benefits covered under the UIF.

In light of the tax changes affecting workers announced in the budget employers and workers can at least have this one reduction for the 2015/16 fiscal year.