Understanding a RAF Loss of Support Calculation
Experiencing the loss of a loved one in a road accident is devastating, and the financial aftermath can be overwhelming for families. The Road Accident Fund (RAF) in South Africa provides crucial financial support to those left behind by compensating for the loss of financial support.
But how is this compensation calculated, and who qualifies to make a claim? With a deep expertise in actuarial-legal matters, Actuary Consulting can guide you through this complex process.
Who is Eligible to Claim?
Dependents who relied financially on the deceased can submit a claim to the RAF. This includes spouses, biological or adopted children, and impoverished parents who depended on the deceased for maintenance. The critical factor is the deceased’s legal obligation to support these dependents.
How is RAF Loss of Support Calculated?
The RAF uses a specific formula to distribute the deceased’s income among their dependents based on the number and relationship of the dependents. The income is divided into portions, with two portions allocated to the spouse, one to each child or indigent parent and two portions to an indigent parent who resided with the deceased.
The allocation of income changes as circumstances evolve, such as when a child becomes financially independent or if the widow remarries, which affects the calculation of loss. Additionally, anticipated promotions and salary increases are considered through expert analysis, mainly if the deceased was early in their career.
The Formula For RAF Loss of Support
To simplify the RAF Loss of Support calculation, consider the following steps and factors:
- Monthly Income of the Deceased (MID): The total monthly earnings of the deceased.
- Number of Portions (NP): This is calculated by allocating two portions to the spouse and one portion for each child and indigent parent. The formula adjusts if there is no spouse.
- Portion Value (PV): This is the value of each portion, obtained by dividing the Monthly Income of the Deceased (MID) by the total Number of Portions (NP).
- Spouse’s Loss of Support (SLS): This is twice the Portion Value (PV).
- Child’s/Indigent Parent’s Loss of Support (CLS): This equals the Portion Value (PV) and twice the Portion Value (PV) for indigent parents who resided with the deceased.
- Total Annual Loss of Support Cap (TALC): The maximum allowable annual loss of support, adjusted quarterly for inflation, is currently set at R361,372.00 with effect from 30 April 2024.
Example Calculation
Let’s consider a scenario where the deceased individual earned R15,000 per month and left behind a spouse and three children. The distribution of the loss of support would be calculated as follows:
- Monthly Income of the Deceased (MID): R15,000
- Number of Portions (NP): 2 portions for the spouse + 1 portion for each child
- Spouse: 2 portions
- Children: 3 portions (1 per child)
- Total Portions: 2 (spouse) + 3 (children) = 5 portions
- Portion Value (PV): The value of each portion is calculated by dividing the Monthly Income of the Deceased (MID) by the total Number of Portions (NP).
- PV = R15,000 / 5 = R3,000
- Spouse’s Loss of Support (SLS): The spouse receives two portions.
- SLS = 2 x R3,000 = R6,000 per month
- Child’s Loss of Support (CLS): Each child receives one portion.
- CLS (per child) = R3,000 per month
Adjustments Over Time
The distribution may change over time due to various factors such as:
- A child reaching financial independence
- Remarriage of the widow
- Changes in the dependents’ financial needs
This simplified calculation offers a baseline. However, adjustments may be necessary based on specific circumstances, including the annual cap and potential future earnings. For the most accurate assessment, it is recommended that you consult legal experts familiar with RAF claims.
Adjustments And Limitations
Before 31 July 2008, changes to the RAF compensation scheme introduced a cap on the total annual loss of support claimable by all dependents of a deceased breadwinner, set at R195,000. This cap adjusts quarterly for inflation to ensure fair compensation despite economic changes.
Each dependent’s claim is proportionately adjusted within this cap to ensure the total does not exceed the set limit. The loss calculation also considers other factors, aiming to provide a lump sum that, if wisely invested, would support the dependents until the deceased’s expected retirement age.
Funeral Expenses
The RAF also covers funeral expenses but with certain limitations. Eligible expenses include the service, grave fee, and casket, while additional costs, such as refreshments, are not covered.
Actuary Consulting: Your Trusted Partner
With over 17 years of experience, our team delivers accurate actuarial reports with a 24-hour turnaround. Our no-win-no-fee policy for RAF, medical negligence, and personal injury claims ensures you only pay upon settlement.
Additionally, our experts are reliable high court witnesses, providing essential testimony to support your claims. In the wake of a tragic loss, understanding the RAF loss of support calculation is necessary to ensure the dependents’ financial stability.