SASSA's decision to terminate Postbank contract raises fears for social grant beneficiaries

The uMkhonto weSizwe Party (MKP) has expressed grave discontent regarding the South African Social Security Agency's (SASSA) decision to terminate its Master Services Agreement (MSA) with Postbank.

This controversial move, effective at the end of September 2025, raises serious concerns for nearly 3 million beneficiaries who depend on Postbank for the disbursement of their social grants, which total approximately R3 billion each month.

As the termination agreement unfolds, the MKP warns that beneficiaries could be pushed towards private banking options, where they may face exorbitant fees for ATM withdrawals.

The resulting charges could range anywhere between R10 and R12 per R100, along with card replacement fees reaching R170.

“These charges will further erode already inadequate grants,” the party remarked in a statement, implying that the financial burden placed on beneficiaries could be monumental.

SASSA justified the termination by referencing significant shifts in how social grants were managed and distributed.

During a presentation before Parliament's portfolio committee, SASSA indicated that the original purpose of the MSA had been compromised due to changes in service delivery, particularly following the liquidation of the South African Post Office and the closure of cash pay points, which rendered key services obsolete.

The formal termination notice was issued in March 2024, in accordance with contract provisions, leaving SASSA with the responsibility to manage the implications of this decision, which impacts those who derive their livelihoods from social grants.

SASSA reassured beneficiaries that Postbank would continue to operate under standard banking services, allowing those who currently use Postbank to receive their grants directly.

“The expiry of the MSA signifies the end of a contractual relationship, not the end of service provision by Postbank to its clients,” SASSA clarified before Parliament.

However, the MKP challenges this assertion, labelling the situation as more than just an “administrative matter,” and argues that it could lead to a humanitarian crisis.

“Social grants are a constitutional right and, for millions, the only shield against hunger. Any disruption or new banking costs will lead to hunger and malnutrition in households already below the food poverty line,” they said.

The MKP further insisted that maintaining the relationship between SASSA and Postbank is vital, arguing that terminating the MSA unfairly offloads financial responsibilities onto those who can least afford it.

“As public entities, both SASSA and Postbank can be held accountable in Parliament and compelled to serve the people,” the MKP stated, while emphasising that private banks, driven by profit motives, cannot be relied upon to protect vulnerable citizens.

Approximately 19 million social grants are paid to around 12 million recipients monthly, totalling R22.4 billion. Of those, nearly 3 million beneficiaries rely on Postbank, comprising approximately 1.96 million regular grant recipients and an additional 1.08 million COVID-19 Social Relief of Distress (SRD) beneficiaries.

DAILY NEWS