Four scenarios for UIF if it runs short of money

UIF becomes financially unsound if no insurance capital left and is required to “borrow from the future” by using 5% of accumulated credits. Sufficient funds should be available to pay benefits on a pay-as-you-go basis. It is possible that the fund could return to financial soundness in 10 years.

UIF becomes financially unsound if no insurance capital left and required to “borrow from the future” by using 60% of accumulated credits. Sufficient funds available. Fund may not return to financial soundness in 10 years without a contribution increase. Would operate on a pay-as-you-go basis.

All accumulated credits will be depleted and the UIF would also need to borrow against beneficiaries and service providers to pay claims. Taking liquidity of assets into account, fund won’t be able to pay all claims. May need to put Road Accident Fund-style measures in place to structure payments.

Possible remedies for the dire financial position of the fund in this scenario could include: Additional funding from Treasury

Temporary increase in contribution rate

Reduction in benefit