The national lockdown can be financially challenging – our list of resources and options for financial relief can help you control your income and cash flow.
Submit a claim to the UIF or TERS
The Unemployment Insurance Fund has offered assistance during the COVID-19 pandemic and has set up specific benefits for, and made existing benefits applicable to employees that are financially impacted.
Specifically, these include:
- The Illness Benefit, which provides coverage if you’ve had to self-quarantine,
- The Death Benefit, in the event you or a family member pass away due to COVID-19, and
- The Reduced Work Time benefit, which applies if you are placed on reduced working hours.
The UIF has limits in place that will provide coverage depending on different events or reasons that you would be unable to work. Usually, a person is only able to claim a UIF benefit for a period of a few months depending on their reason for the claim itself.
Similarly, The Employer-Employee Relief Scheme, or TERS, is helping South African employers who have been unable to operate.
What’s the difference between UIF and TERS?
The UIF is designed to act as a short-term relief to employees who become unemployed or are unable to work because of illness, adoption or maternity leave. Broadly, it is an insurance that all working South Africans contribute to monthly and can claim from if they are unable to work and receive their full salary.
TERS is a new benefit created by the UIF specifically for businesses and employees that are unable to work at all, or at full capacity during our national lockdown. TERS is a benefit that is applied for by employers and is designed to help employers that have been closed for three months or more as a result of COVID-19 and the national lockdown.
Delay your provisional tax payment
If you are self-employed, the National Treasury has stipulated that you will able to defer 35% of your provisional tax payment over the next 6 months; meaning that if you do pay provisional tax, you may be able to use these funds to manage your expenses and then pay them later. While this will not attract additional interest, the 35% remainder of your provisional tax payment will remain due. This benefit will only apply to business owners with an estimated gross income of less than R100 million.
Banks offer a three-month payment holiday
If you are in financial distress as a result of the COVID-19 pandemic, you can apply to your bank to receive a three-month payment holiday on your outstanding long-term debts. These arrangements usually apply to loans with repayment terms of 6 months or more (such as vehicle asset finance or a bond) and major South African banks such as Standard Bank, FNB, Nedbank, Capitec, and ABSA have offered their payment relief schemes during this time.
What is a payment holiday, and how does it work?
A payment holiday is an agreement where a lender will allow a borrower to either temporarily stop or reduce their monthly repayments. In some cases, a lender may charge interest accrued over the payment holiday or may not charge any additional interest on the provision a borrower returns to make full loan repayments at an agreed date.
If you’re considering a payment holiday on a long-term loan such as vehicle finance or a bond and your circumstances have changed, it is worthwhile to check whether you have an active credit insurance policy on your account. Credit insurance is a policy designed to assist you when you are required to make repayment on a longer-term loan. Our helpful guide can help you determine if you are eligible to make a claim.
Consider using debt reduction strategies
If you have multiple open loans, categorising and managing your debt can help you create a repayment strategy. One method to do this is called the ‘snowball’ method, which enables you to make over-payments to repay your debt more quickly than you originally promised.
If you’d like to learn more about the snowball method, you can download our easy-to-follow guide here.
Insurers offer reduced premiums
If you have active insurance policies, your providers may offer you a reduced monthly premium if you can prove you have suffered a loss of income; many major providers, such as vehicle insurers or life insurance policies, have offered their customers reduced premiums to assist them.
By approaching your providers, you may be able to negotiate a temporary discount on your premiums or take a payment holiday on your premiums by offsetting that cost against a future claim. However, remember to investigate and consider your options carefully, as insurance coverage can help you manage unforeseen expenses such as medical emergencies.
Draw up to 20% per year from your retirement annuity
If you are retired, the National Treasury has confirmed that individuals receiving income from a living annuity fund can choose to increase their access to 20% or decrease their access to 0.5% of their retirement annuity per year.
While using additional funds from your annuity may have repercussions in the future if you are not able to generate additional income, leveraging these increases can help you manage your cash flow during this time and bridge expenses.
Download our financial readiness pack
Our Financial Readiness Pack has been designed to help you manage your money. With resources to help you budget, save, and control your debt, you can use this free resource to develop a full view of your finances and set practical steps to get on the path to financial health. We’ve also included useful information on how you can set up an emergency fund, and how you can spot scams and avoid financial fraud.
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