The 7.9 percent increase in the budget over the previous year was to cater for a larger number of beneficiaries, mostly in the child support grant, and higher grant pay-outs, he told the National Assembly in tabling his first main budget.
The system supported around 16.4 million beneficiaries.
Old age pensions and disability grants would increase on April 1, from R1350 a month to R1410.
The foster care grant would increase from R830 to R860 a month.
The child support grant would increase to R330.
According to the 2015/16 budget review, the increased value of social grants was in line with projected inflation and would be reviewed in October.
Gordhan said the “long-outstanding” discussion paper on social security reform would be published.
“Both health insurance and social security are vital concerns of all South Africans, and we look forward to public debate and engagement between stakeholders,” he said.
In the long-term, the department planned to develop an in-house grant payment system.
From the new financial year the SA Social Security Agency would start taking over the biometric enrolment of beneficiaries from a contractor.