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A costing model for the South African social assistance system

ABSTRACT An effective social assistance system needs to be sustainable and affordable and needs to provide good coverage and adequate benefits. The authors’ model to forecast the cost of the South African social assistance system to 2040 provides insights into key cost drivers. This allows policy-makers to explore the effects of policy levers like benefit levels and coverage. Using assumptions derived from analysis of past experience, the model projects that the cost of grants as a percentage of GDP is expected to remain stable. However, this result is very sensitive to GDP forecasts, coverage, grant increases and changes to the retirement age. The following factors are less significant: changes to age-eligibility requirements for child benefits, proportions of benefits paid, expense inflation and population model.