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COSATU notes Parliament's Standing Committee: Finance's decision for the Two Pot Pension Reforms to come into effect on 1 September 2024

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COSATU notes Parliament's Standing Committee: Finance's decision for the Two Pot Pension Reforms to come into effect on 1 September 2024

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5th December 2023

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The Congress of South African Trade Unions (COSATU) notes Parliament’s Standing Committee: Finance’s decision for the two pot pension reforms to come into effect on 1 September 2024.  The Federation and millions of workers have been looking forward to the two pot pension reforms coming into effect and were heartened by the previous commitment that they would come into effect on 1 March 2024. 

Workers and COSATU are naturally deeply disappointed by the shift in the implementation by 6 months to 1 September 2024.  It is critical that Parliament, Treasury, the South African Revenue Service and the pension funds move with speed and surgical efficiency to ensure the remaining legislative and administrative steps are expedited to ensure that no further delays occur.  The 1st of September 2024 must be the final date of implementation.  No further delays must dare be entertained. 

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The two pot pension reforms initiated by COSATU, will provide badly needed relief to millions of highly indebted workers, in both the private and public sectors, who will soon be able to access limited portions of their pensions without having to resign from their jobs nor cash out their entire funds.

The Federation is pleased the Standing Committee: Finance has finalised the two pot pension reform legislation and the Revenue Laws Amendment Bill will now go before the National Assembly for adoption on Wednesday 6 December 2023.  This will be an important step forward and provide some comfort to workers who have justifiably grown sceptical and frustrated with the continuous delays in implementation.

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These engagements have been taking place since COSATU first tabled them at Parliament in 2020.  Workers are drowning in debt due to a struggling economy, a 41% unemployment rate, rising costs of living, brutal repo rate hikes and callous employers who pay workers peanuts.  The current pension laws only allow workers access to their pension funds when they retire or in the event of losing their job or resigning.  Consequently, many workers opt to resign and cash out their entire pension funds leaving them to retire in poverty. 

The two pot reforms offer a positive balance where workers will be able to access 10% of their existing savings up to a maximum of R30 000 when the law comes into effect and from then on to access one third of their future annual contributions once a year.  They will no longer need to resign to have some access to their pension funds. 

Whilst these amounts will not be sufficient to settle home or car loans in most instances, they will be the equivalent of a thirteenth cheque for most workers and help settle short term debt and other urgent financial pressures.  Overtime these thirteenth cheque equivalents will help heal workers’ financial wounds.

These reforms will help boost savings in the longer term as workers will no longer be resigning to cash out their entire pension funds but will rather access their savings pot instead.

In order to ensure that this long-sought and badly needed relief takes place on 1 September 2024, it is critical Parliament move with speed to conclude its remaining processes in the National Assembly and the National Council of Provinces in order to allow the President to assent to the Bill and for the remaining administrative processes to be undertaken by Treasury, SARS and the pension funds in time.  Workers cannot afford nor accept any further delays.

 

Issued by COSATU

 

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