The Congress of South African Trade Unions (COSATU) welcomes excellent progress at Parliament on the Pension Fund Amendment Bill, which is one of two critical amendment bills that will enable the long sought Two Pot Pension Reforms to take place on 1 September 2024. COSATU made its submission on the Bill to the National Council of Provinces (NCOP)' Select Committee: Finance today.
The other Bill, the Revenue Laws Amendment Bill, has been adopted by both Houses of Parliament.
The Federation has been engaging on the Two Pot Pension Reforms with Treasury and Parliament since May 2020. We are pleased that whilst we may not have achieved everything we proposed, that not only have we managed to find consensus on the key matters but legislation providing for the reforms is before Parliament and there is agreement for implementation to happen on 1 September 2024.
We welcome the continuous support we have received from Members of Parliament, in particular from the African National Congress and the Chairpersons of the Parliamentary Committees on Finance.
Workers are highly indebted due to slow economic growth, the rising costs of living and having to support relatives in a society battling a 41% unemployment rate. The current pension laws are excessively inflexible only allowing workers access to their pension funds upon retirement, losing their job or resignation. Consequently, many workers opt to resign to cash out their entire pension funds leaving them unemployed and with no savings left.
The Two Pot Reforms provide a progressive compromise and fair balance where workers will have access to a portion of their pension funds whilst remaining employed. This will allow workers to access 10% up to R30 000 of their existing savings when the law comes into effect on 1 September 2024 and from then on once a year, access to a third of future savings. Workers will retain access to existing savings. These will enable workers to remain employed, receive the equivalent of a thirteenth cheque on 1 September and once a year going forward and have more savings when they retire.
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COSATU welcomes amendments made to the Bill by the National Assembly to ensure the Government Employees, Transnet, Post and Telecommunications Pension Funds are included in the Two Pot Reforms and their members enjoy the same access. This was critical to ensure all workers are included in the Two Pot Reforms.
The Federation notes proposed amendments by industry to the Bill, that these are fair and where needed and possible, should be incorporated. What is most important is that all amendments to the Bill be fast tracked to ensure the NCOP and the National Assembly can adopt the Bill before rising for the May elections. This is critical to enable the President to sign, Treasury to promulgate, SARS to adjust its tax systems and the pension funds to amend their rules and put in place the necessary education and administrative support for workers seeking this relief.
We are confident we are on track and all deadlines will be met to ensure implementation on 1 September 2024. Workers have been waiting for this relief since 2020. We dare not disappoint them.
