Minister assures South Africans social grant payments will continue despite Postbank agreement termination

Social Development Minister Sisisi Tolashe on Wednesday gave assurances that the termination of the Master Service Agreement (MSA) with Postbank will not interrupt the payment of social grants.

Addressing the Social Development Portfolio Committee, Tolashe said the payments of social grants to beneficiaries who bank with Postbank, in particular, will not be interrupted.

“The termination of the MSA is a contractual matter to terminate an agreement that no longer serves the purpose for which it was intended.

“Postbank remains a fully licensed and operational financial institution and beneficiaries will continue to receive their grants in their Postbank accounts just as they had before. No change in this regard will occur,” she said.

Tolashe was appearing before the committee with a South African Social Security Agency (Sassa) delegation to brief MPs on the impact of the expiry of the Sassa-Postbank MSA at the end of September.

Sassa entered into the MSA with South African Post Office (SAPO) after the Constitutional Court terminated the contract for payment of social grants with Cash Paymaster Services (CPS) in September 2018.

SAPO was granted by permission to take over from CPS by the National Treasury and to make use of its offices as over-the-counter pay points for the payment of social grants.

In November 2023, a decision was taken to close the over-the-counter services provided by SAPO and the cash pay points.

Despite Sassa requesting a six-month notice to terminate the contract, as the withdrawal of the over-the-counter and cash points centre did not serve the original intent, Postbank insisted on an 18-month notice.

“Sassa attempted to negotiate with the bank for an earlier withdrawal, with little success, and then issued a revised notice in March 2024, with an 18 month notice period in line with MSA,” read a presentation to the committee.

Tolashe said no new service provider will be appointed to replace Postbank.

“No client needs to move to another bank unless they themselves choose to do so,” she said.

Acting Sassa CEO Brenton van Vrede informed the MPs that 1.96 million social grant beneficiaries were paid R3 billion through Postbank monthly.

Van Vrede said the termination of the MSA will not change the direct payments to their accounts.

“We will continue to pay social grants into Postbank accounts and that does not need an MSA for us to do that,” he said.

Van Vrede explained that Sassa does not enter into agreements with banks for the payment of social grants.

“Beneficiaries select the bank of their choice, and Sassa facilitates this through switching facilities. Therefore, no new service provider is being appointed.”

He stated that the expiry of the MSA signified the end of a contractual relationship, not the end of service provision by Postbank to its clients.

“Beneficiaries who choose to continue banking with Postbank will retain access to their funds through familiar channels. Postbank will however operate like any other bank, independent of Sassa, and will continue to provide banking services to clients who currently bank with them,” Van Vrede said.

He also said Postbank clients will continue to access their funds through the Gold Card and the Black Card.

Van Vrede reiterated that the MSA termination was “merely an administrative matter between Postbank and Sassa” and services will not change.

“As long as Postbank remains licensed and operates, their money will be safe,” he added.

Neither the South African Reserve Bank nor Postbank were present at the meeting.

MPs cautiously welcomed the assurance that social grant payments would be not be interrupted.

“Thanks for the commitment that there will be uninterrupted payment, but again that is to be seen come the first week of October,” said DA MP Alexandra Abrahams.

Cape Times