Johnathan Paoli
Trade union federation COSATU has called for the speedy implementation of the new Two-Pot retirement regime, proposed by the National Treasury which enables workers to have access to their pension funds without first resigning or retiring.
In a submission to Parliament on Tuesday, COSATU’s Parliamentary coordinator and acting spokesperson Matthew Parks said struggling workers are waiting anxiously for this relief.
“We do think that this Two-Pot reform, while it’s not perfect, is a progressive compromise, and it really does achieve many positive things. It prevents workers from needing to resign to access their full pension funds. They can rather have access to a limited portion,” Parks said.
Parks appealed for these new provisions to also extend to retrenched workers, and said Parliament should not delay this matter until the new administration.
“Any reflection of the National Credit Regulator of debt levels, shows you that, there’s no worker in this country that’s not drowning in debt – public or private,” Parks said.
National Treasury proposed on Monday certain legislative changes to public sector pension laws, namely the Government Employees Pension Law of 1996, the Post and Telecommunications related Matters Act of 1958, and the Transnet Pension Fund Act of 1990; following the extended postponement of the deadline of implementation, which was moved several times by National Treasury and the Parliamentary Standing Committee on Finance.
Treasury previously said the proposed amendments inserted certain definitions in order to provide for the introduction of the savings withdrawal benefit; to provide for the appropriate account of a member’s interest in the savings, retirement and vested components, and to provide for deductions that the funds may make.
The Treasury said these amendments to the public sector pension laws will be proposed for inclusion in the Pension Funds Amendment Bill [B3—2024], which is currently under consideration of the standing committee.
The Treasury has officially stated that from September this year, all amounts saved into a retirement fund would be split into a savings and a retirement component.
The system aims to enhance retirement outcomes while providing flexibility for fund members facing financial distress, by allowing access to the savings component before retirement, while protecting a portion for retirement.
One-third will automatically go into the savings account and be available for withdrawal prior to retirement, with the remaining two-thirds only being accessible at retirement, and subsequently be used to buy an annuity-providing product.
Exceptions include old generation or legacy retirement annuity policies, funds with no active participating members and pensioners and members of provident funds who were 55 years and older on March 1, 2021 and have not opted into the two-pot system.
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