The country’s biggest trade union federations have welcomed moves to introduce the “two-pot” retirement system which would allow workers to be able to access at least a third of their pensions while they are still economically active.
THE COUNTRY’S biggest trade union federations have welcomed moves to introduce the “two-pot” retirement system which would allow workers to be able to access at least a third of their pensions while they are still economically active.
The SA Federation of Trade Unions (Saftu) and Cosatu said the proposal would provide much-needed relief to many workers who are already battling to make ends meet.
The National Treasury and SA Revenue Service (Sars) last week published for public comment the revised 2023 Draft Revenue Laws Amendment Bill and 2023 Draft Revenue Administration and Pension Laws Amendment Bill.
They said the draft bills provide the necessary legislative amendments required to implement the first phase of the “two-pot” retirement system. Members of the public have until July 15 to comment on the bills. The bills, if passed, will see the system being rolled out next year. The system will allow people to withdraw a portion from their pension fund while employed.
Saftu spokesperson Trevor Shaku said they had been advocating for such a system. He noted how workers had battled to cope with rising living costs, especially in the past three years.
“We have a challenge in this country because you find that out of the entire working population, the majority of those workers earn below R5,800 each month, with a host of needs to take care of. This often results in many of them going to lending institutions in order to be able to meet some of their needs such as building homes,” said Shaku.
He added that the plight of many workers had worsened in the past three years – they had to contend with below inflation salary increases and other setbacks owing to the Covid-19 lockdown.
Shaku said interest rate hikes by the Reserve Bank meant that debt repayments had become more difficult.
“We have a central bank that seems focused on inflation targeting and sees raising interest rates as the only way to go, something that is hitting workers hard.
“So the ability of workers to be able to access some of their money is a significant way in which their plight can be dealt with because things are very tough at the moment,” Shaku said.
Cosatu said it believed that the move would ease the debt burden.
Cosatu spokesperson Sizwe Pamla stressed that workers should settle their debts first before attending to other matters with the money.
“The federation appreciates the move and believes that once this money enters the economy it will stimulate demand and serve as some form of stimulus.”
University of Zululand political economist Professor Irrshad Kaseeram said while the news could come as some form of immediate relief, it also pointed to a scary picture of a government that was unable to provide an appealing environment for investments.
He noted that this debate on workers accessing a portion of their pensions had been part of discussions for nearly three years and showed the situation continued to worsen.
“We have an economy that is not creating jobs and infrastructure that continues to deteriorate and is not attracting any new investments which could result in jobs,” said the academic.
“In South Africa we have what is called ‘black tax’, where an individual finds themselves basically carrying the entire family financially, even siblings, because of the nature of our economy.
“This has risen significantly in recent years because there have been more jobs lost than created, which has meant that those who are working are really feeling the burden.”
He cautioned that the move for workers to access their pensions should be carefully crafted by lawmakers to enable it to have the desired effect.
“Because we are a highly indebted country with workers battling, we need to be careful of where this money that workers will be able to access goes towards. If it goes to projects such as buying a house then it is money well-spent,” said the academic.
