But with trust between government and other social partners at an all time low, there are concerns that such a fund could be open to political abuse.
The National Social Security Fund will combine all existing pension funds, public and private into a fund estimated at R3-trillion.
All employers and employees will be obliged to contribute at a combined rate of 12 percent of their income per annum.
The fund will also include the Unemployment Insurance Fund.
Labour says social partners must be involved throughout the process to prevent the fund from being misused.
One example used was bailing out mismanaged state-owned companies.
Federation of Unions of South Africa (Fedusa), Dennis George said: “We must have direct representation for labour on all the structures, including on how the money will be invested. If you look at the problem that we are currently facing with the government employee fund and PIC. Labour is on the GEPF as trustees but when it comes to the investment part labour has slipped up. Therefore, there’s no labour representation, so we don’t always know the inside of what will happen.”
The fund is currently being negotiated at the National Economic Development and Labour Council.
Government will subsidise low-income workers to minimise disruptions with the introduction of mandatory contributions.
While many agree there’s a need for such a fund, funding and modalities must be agreed upon.
“You need good and clean governance in order to manage it in a proper way. In the current form with our SOEs you can’t rule out that those concerns are justified. But it can’t deter you from doing something good based on the fears of what might be happening,” said Cosatu general secretary, Bheki Ntshalintshali.
Various other countries operate this type of overarching social security fund.
Experts say systems must be in place to ensure efficiency and prevent any abuse.
International Labour Organisation director, Joni Musabayana said: “First there must be agreement and that’s why it took so long. Secondly is to look structure by structure which parts can be easily integrated. Perhaps start by the low hanging fruits. Those that can fully integrate in an effective manner without disrupting too much. The challenge is that there’s already a lot of vested interests. There are institutions, there are beneficiaries. There are those promoting their institutions.”
It could take up to three years before the National Social Security Fund is implemented.