Deductions from social grants valid, court rules

A DEBIT order made against a social grant beneficiary’s account is nothing more than payment of a valid debt‚ the Pretoria High Court found yesterday.

Judge Corrie van der Westhuizen made the ruling in an application by Net1 and its subsidiaries to be allowed to make deductions from social grant beneficiaries’ accounts.

Net1 owns Cash Paymaster Services, which distributes social grants.

The judge found that regulations 21 and 26A under the Social Assistance Act 13 of 2004‚ which was promulgated in May last year, “do not operate to restrict beneficiaries in the operation of their bank accounts”.

The South African Social Security Agency and the Department of Social Development had in the regulations prohibited all electronic debits‚ stop orders and electronic fund transactions from beneficiary accounts held at Grindrod bank‚ a Net1 subsidiary.

The new regulations allowed only one deduction per month not exceeding 10% of the value of the beneficiary’s social grant for a funeral policy issued by an insurer.

The Black Sash‚ as an intervening party‚ argued that if the court ruled in Net1’s favour‚ the minister be given the opportunity to amend the regulations to protect grant beneficiaries from exploitative practices.

The judge held that the regulations did not and could not apply where beneficiaries held bank accounts with other banks.

The department had not responded to questions on the ruling at the time of going to print.