How Is the UIF Death Benefit Calculated? The Death Income benefit pays a monthly income to your client’s dependants in the event of his or her death.
Dependants benefits at UIF
Following the death of a contributor to the Unemployment Insurance Fund (UIF), you can claim dependant’s benefits from the UIF, if you are a:
- spouse
- life partner
- guardian
- child of the deceased contributor.
You must apply within six months of the death of the contributor. Dependent children under the age of 21 years are entitled to benefits if there is no surviving spouse or life partner.
Formula to Calculate UIF Benefits
- Daily Income for Weekly Earners = average weekly rate x 52/ 365
- Daily Income for Monthly Earners = average monthly rate x 12/ 365
- IRR = 29.2 (7173.92 / 239.92 + Daily Remuneration)
- UIF Benefits = Daily Income x IRR
Let us Understand Through an Example
Let us say you earned R15,000 per month and the benefit amount is around R10,001 during the first year of your contribution to the fund. If you worked for 260 weekdays of the year, what would be the calculations?
- Average Monthly Salary = Monthly Salary x 6 Months/ 6 Months = (15000 x 6) / 6 = R15,000.
- Average Daily Wage = Average Monthly Salary x 12 Months / 365 days = (15000 X 12) / 12 = R493.15.
- DBA or Daily Benefit Amount = IRR = 29.2 + (7173.92 / 239.92 + Daily Remuneration) = 29.2 + (7173.92 / 232.92 + 493.15) = R192.33.
- Total UIF Benefit Amount = DBA X Available Credit Days = R192.33 x 52 = R10,001.16.
How to Calculate UIF Death Benefits
Figuring out how much you can get from UIF death benefits is complicated, as the department considers various factors when deciding what you are eligible for. This includes the deceased employer’s earnings, the duration of their employment, and the contributions made to the fund. Employees working over 24 hours a month must contribute 1% of their monthly pay to the Unemployment Insurance Fund (UIF).
Additionally, the employer is obligated to contribute 1% of the employee’s monthly remuneration. If the contributor passes away, the dependents can access the funds.
Now, the main question is how the UIF death benefit is calculated. To calculate the death benefit, you can use the following formula:
Total Benefit Amount = Daily Benefit Amount x Available Credit Days
The total benefit amount refers to the overall benefit amount the employee will receive. The daily benefit amount is the amount of money you are entitled to per day from the UIF death benefit. Meanwhile, the available credit days represent the number of days for which you are eligible to receive the benefits.
It could be based on different factors like the deceased contributor’s duration of employment, contributions to UIF, or other criteria. Accumulation of credit days operates on the following bases:
- You earn one credit day every four days you actively work as a contributor. However, there is a cap on the total number of credit days you can accumulate. This limit is set at 365 credit days.
Simply put, you can continue accumulating credit days for as long as you work, but once you reach the maximum of 365, you won’t get more credits even if you keep working. In addition, the Daily Benefit Amount is calculated as 66% of your income, capped at R17,712 per month.
What is the UID Death Benefit Amount?
The UIF will provide the entire amount that the deceased employee would have received if they had become unemployed and applied for benefits from the funds. However, the sum varies for every individual due to multiple factors such as their salary in the five years before their death, the duration of their employment, and more.
In conclusion, UIF benefits are an excellent insurance project for people who are in search of a full-proof future plan. All you need to do is contribute 2% of your monthly remuneration to the fund and receive it later when you are on leave or unemployed. I hope this guide was helpful for anyone figuring out how to calculate UIF payout benefits.
What Is The Maximum UIF Payment?
The maximum payout is R17,712 per month and R212,544 per year based on the recipient’s circumstances and the contribution. An enrolled person can receive Unemployment Insurance Funding for 12 months. In case he finds a job position during these days, his application will be declined.
The monthly payment cannot be increased whether you are a former officer or staff member. The maximum UIF payout was R14, 872 but due to the high inflation in South Africa, the government has increased the monthly maximum payout. However, no one can get more than R17,712.
