RAF Loss of Support Calculation

RAF Loss of Support Calculation:

In the heart-wrenching event of losing a loved one in a road accident, the financial repercussions can add an overwhelming burden to the already devastated families. The Road Accident Fund (RAF) in South Africa steps in to alleviate this burden by compensating for the loss of support. But how exactly is this loss calculated, and who is entitled to claim?

Who Can Claim?

Individuals who depended on the deceased for financial support can file a claim with the RAF. This includes spouses, biological or adopted children, and indigent parents who relied on the deceased for maintenance. The claim hinges on the legal obligation the deceased had to support these dependents.

RAF Loss of Support Calculation

The RAF employs a formula to apportion the deceased’s income among the dependents, reflecting the nature and number of dependents. Specifically, two portions of the income are allocated to the spouse, while one portion is earmarked for each child and indigent parent.

Practical Example: If we consider a deceased individual earning R13,500 per month, leaving behind a spouse and three children, the distribution of loss support would be as follows:

  • Father’s Share: R3,750 per month (which falls away upon death)
  • Mother’s Share: R3,750 per month (as loss of support)
  • Each Child’s Share: R1,875 per month (as loss of support)

The division of income changes as circumstances evolve, such as when a child reaches self-sufficiency or if the widow remarries, affecting the loss calculations. Additionally, if the deceased was at the start of their career, expected promotions and salary increases are factored into the loss calculation through expert analysis on potential earnings.

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Formula

To devise a simple formula for calculating the RAF loss of support, we will consider the key factors mentioned: the deceased’s monthly income, the number of dependents, the specific allocations for a spouse and children, and the limitations imposed on the total annual loss of support. This formula will help in estimating the monthly loss of support for each dependent and the annual cap limitation.

Let’s break down the formula into steps for clarity:

  1. Monthly Income of the Deceased (MID): The total monthly income earned by the deceased.
  2. Number of Portions (NP): This is determined by allocating 2 portions for the spouse and 1 portion for each child and indigent parent. If there is no spouse, the calculation adjusts accordingly.
  3. Portion Value (PV): This is the value of each portion, calculated by dividing the Monthly Income of the Deceased (MID) by the total Number of Portions (NP).
  4. Spouse’s Loss of Support (SLS): This is calculated as 2 times the Portion Value (PV).
  5. Child’s/Indigent Parent’s Loss of Support (CLS): This is equal to the Portion Value (PV).
  6. Total Annual Loss of Support Cap (TALC): The maximum allowable total annual loss of support, which is adjusted quarterly for inflation. As of the example, this is set at R195,000.

Example Calculation:

For a deceased with a monthly income of R13,500, a spouse, and three children:

  • MID: R13,500
  • NP (Spouse + 3 Children): 2 (spouse) + 3 (children) = 5 Portions
  • PV: R13,500 / 5 = R2,700
  • SLS: 2 x R2,700 = R5,400
  • CLS (per child): R2,700

This simplified formula provides a baseline for calculating loss of support. However, it’s crucial to note that the actual calculation might require adjustments based on specific circumstances, including the annual cap and potential future earnings of the deceased. For the most accurate and personalized assessment, consulting with a legal expert or financial advisor familiar with RAF claims is advisable.

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Limitations and Adjustments

Notably, changes to the RAF compensation scheme post-31 July 2008 introduced a cap on the total loss of support claimable by all dependents from a single deceased breadwinner to R195,000 annually. This cap is subject to quarterly adjustments for inflation, ensuring fairness in compensation despite economic fluctuations.

Each dependent’s claim is adjusted proportionally within this cap to ensure that the total does not exceed the set limit. The calculation of loss incorporates considerations for inflation and other factors, aiming to provide a lump sum that, if wisely invested, would support the dependents until the deceased would have retired.

Funeral Expenses: The RAF also compensates for funeral expenses, albeit with limitations. Claimable items include the service, grave fee, and casket, but not ancillary costs like refreshments.

Understanding the RAF’s loss of support calculation offers a glimpse into the support system designed to aid families during their most challenging times. It underscores the fund’s role in providing financial stability, ensuring that dependents are not left destitute following the tragic loss of a loved one.