UIF increases its ceiling

Summary

Released by Department of Labour on 05 September 2005

Minister of Labour, Membathisi Mdladlana has announced a big adjustment in the maximum earnings level for beneficiaries of the Unemployment Insurance Fund (UIF).

The Minister explained that the UIF on an annual basis sets maximum earnings levels for contributors. He said all those workers who earned above the maximum level would only contribute up to the maximum and when they become unemployed would then receive benefits at the rate of their contribution.

“In short, the maximum monthly rate of earnings or remuneration ceiling for UIF benefits provides a limit for the 2% contributions and is used in the calculation of the income replacement rate (IRR) for each claim,” Minister Mdladlana further clarified.

The current UIF‘s remuneration ceiling is R8 836 per month.

“The monthly level of remuneration for determining maximum contributions and benefits will be increased to R10 966 per month with effect from October 01, 2005 . This represents an increase of 21% on the current maximum earnings,” Minister Mdladlana has announced.

The notice to this effect was expected to be published in the Government Gazette today Friday, September 02, 2005.

The Labour Minister added that the impact of the ceiling increase would lead to benefit improvement.

Explaining this big adjustment, he said it was informed by the current earnings of a skilled manual labourer or an artisan at the level of C3 on the Paterson grading system.

He said contributions will, from October, be payable in respect of all workers earning up to R131 592 per annum.

“Let me take this opportunity to explain that while workers who earn more than the remuneration ceiling are required by law to contribute to the Fund, the contributions payable will only be calculated on the maximum earnings level,” added the Labour Minister.

The Minister added that according to the assessment of the UIf’s actuaries the impact of this increase would result in a 3.64% increase in UIF benefit payments and a further 6.47% increase in contributions.

He concluded by saying that the UIF was in the process of informing all its employers about this adjustment.