By Alicia Mmashakana
THE Congress of South African Trade Unions (Cosatu) said it is pleased with the progress made in preparing for the implementation of the two-pot pension reforms starting from 1 September 2024.
Cosatu first proposed the two-pot system in 2020, during the COVID-19 pandemic, after workers were left high and dry when payments from the Temporary Employee Relief Scheme were not received.
Then the Revenue Laws Amendment Bill was passed in 2022 which legalised the two-pot system. This system allows employees to access a portion of their retirement savings without having to cash out or resign from the entire pension fund. And the only way to do this is for workers to resign from their jobs.
On Monday, Cosatu Parliamentary Coordinator Matthew Parks said from 1 September, workers will no longer need to resign from their jobs to access some relief from their retirement savings.
Workers will retain access to their existing savings as well as to a third of future savings, he said.
“Cosatu has been working closely with Parliament, Treasury, SARS, the Financial Sector Conduct Authority (FSCA) and the pension funds to ensure all systems are ready for 1 September. Both legislative amendment acts have been passed and signed into law,” Park said.
Cosatu has also made proposals to the Treasury to lower the tax burden on low-income workers, allow workers greater financial relief in future, enable workers access to their full savings in the event of losing their jobs and allow workers to use their pension funds to cover the costs of education.
“These reforms provide workers for the first time choices on how their funds can be used to improve their lives. They lay the foundation for further reforms that will help lift millions from poverty before and during retirement,” Park said.
However the Police and Prisons Civil Rights Union (Popcru) has rejected the tax implications of The Bill and openly discourages its members from accessing their retirement funds using the two-pot system.
“We are discouraging our members from accessing the savings pot withdrawal as they will be worse off as the two-pot process is not designed to assist public servants but will disadvantage them, ” said Popcru president Thulani Ngwenya.
Ngwenya said Popcru will call for a delay in the implementation of the two-pot system, pending further proposals with all stakeholders, to allow all members to access the actual 10% of their pension fund while also allowing its members to access their pension fund savings tax free.
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