The Chief Executive Officer of the Road Accident Fund (RAF) said that rich South Africans should not be able to claim from the fund.

RAF head, Collins Letsoalo told Parliament’s Standing Committee on Public Accounts (Scopa) that the RAF Act should be reviewed and amended to exclude rich people from claiming.

Letsoalo argued that high-income earners are the only people who are truly benefiting from the scheme.

“The people who earn the most benefit the most because (the payment) depends on loss of earnings,” Letsoalo said.

“We must exclude the rich out of this scheme,” he exclaimed.

Letsoalo noted that the RAF should benefit specifically those who cannot afford private insurance.

The CEO, however, did not expand or explain which income bands should be classified as rich and therefore excluded.

Scopa members debated whether the RAF was a social benefit fund, and Letsoalo argued that it was not.

“Why would you even have a situation where there’s a social benefit that needs a lawyer for you to access it? So, it’s not for the poor, this thing, and that’s a fact,” Letsoalo said.

“As I said, it’s the most regressive form of taxation issue. Because the ones that have the most will obviously get the most from the system.”

Last month, RAF spokesperson McIntosh Polela expressed the same sentiments about excluding rich people from the fund.

Polela told Moneyweb that South Africans who can afford to get cover for themselves should not be able to withdraw or claim from the RAF.

“The RAF covers all and sundry, whether you are middle class, rich or you are a billionaire, it covers you, and that’s not fair to the people who need this money the most,” Polela noted.

“So the argument is, you and I can afford to pay our own cover using a private entity, why are we dipping into a social benefit? We don’t need this social benefit, as the people who can afford it need it to be going or redirected to those who cannot afford it,” he explained.

Calls for urgent reform

Aspects of the current Road Accident Fund Act require revision, according to legal experts.

In the short-term, the government must bail out the RAF to ensure the objectives of its legislation are met, professor Hennie Klopper, an Emeritus Professor in the Department of Private Law at the University of Pretoria said.

Klopper made it clear that the road traffic crash victim compensation system is in crisis.

He said while it is clear that the RAF is experiencing financial problems, much attention is being devoted to the current RAF management’s attempts to solve these issues.

These range from the reclassification of the road traffic collision compensation system as a social benefit scheme, to advocating for the restriction of medical cost payments funded by medical aid, compensation for foreigners and high-income earners, and the removal of attorneys from the claims process.

This raises the question of whether these measures will effectively turnaround the fortunes of the RAF.

IOL BUSINESS