The Congress of South African Trade Unions (COSATU) has submitted an urgent request to the Minister of Finance, Tito Mboweni, to issue an emergency Direction to allow workers to access part of their retirement fund savings, as income replacement for COVID-19 emergency finance relief.
The request is contained in a formal letter which the federation has sent to the Minister yesterday, 23 May 2020.
The background to the matter is as follows:
COSATU was advised that our affiliate, the Southern African Clothing & Textile Workers’ Union (SACTWU) had previously (on 17 April 2020 and 7 May 2020 respectively) requested a meeting with the Minister regarding the above matter. It follows on an even earlier request which SACTWU had submitted to Treasury on this matter, as far back as 21 March 2020.
The Federation (COSATU) was told that there had been no response to their request for such an urgent meeting, to date.
During a General Secretaries meeting, all affiliated unions supported this position by SACTWU and agreed that the matter should be accordingly escalated to COSATU Head Office for coordination and facilitation. On behalf of all our affiliated unions, we therefore re-iterate as follows on their behalf:
COSATU is deeply concerned about the very serious income gap and consequential hardships which many of our members and workers, in general, are currently experiencing during the COVID-19 lockdown period.
This is because other than the very meagre UIF COVID-19 TERS benefit, many of our members are not receiving income due to the fact that no work is performed during the lockdown period, by the vast majority of our members.
We are of the firm view that access to sufficient income during the lockdown period, coupled with the threat of a rapidly spreading COVID-19 pandemic, is critical to the well-being of workers and their families.
We also anticipate that the sectors in which we organise, will be detrimentally affected by the current COVID-19 crises which our country and the world finds itself in now.
A large number of our members are from poor working-class communities and are the most seriously affected by this crisis.
Considering the around 11 million workers were already struggling with debt and stagnant wages even before the Covid -19 outbreak; we believe that it is very important to explore serious options on behalf of our members, ways to assist them to plug and mitigate the serious income gap, which is being created due to the lockdown (which we support).
Accordingly, we wish to explore the possibility of our members’ accessing their retirement fund withdrawal benefits, in order to assist them financially in the current very difficult period. This request has now been repeated to the Minister in our letter of yesterday to him. This is even more urgent now than before.
Specifically, we are seeking a facility where our members could, on an urgent and expedited basis and in the immediate period ahead, access a portion of their retirement fund withdrawal benefits, in order to help plug the income gap between what they are entitled to receive from the UIF, and their normal wages/salaries.
To date, we have been preliminarily advised as follows:
1. That pre-retirement access to retirement fund withdrawal benefits is currently mainly legally only possible for purposes of assistance relating to housing.
2. That the Financial Sector Conduct Authority (FSCA) does not have the authority and/or powers to waive the provisions as set out in point 1 above, to allow pre-retirement access in the manner that we envisage.
3. That it might be possible for the Minister of Finance to intervene on an urgent basis in terms of the provisions of the Disaster Management Act, by issuing an emergency Direction in this regard.
We accept that there might be some practical issues to consider, such as how such pre-retirement emergency withdrawal is treated by our country’s tax regime, as well as the specific amounts involved. At this stage, we estimate that such emergency pre-retirement withdrawal benefit for emergency COVID-19 relief would be no more than the equivalent of 6 month’s wages or salary.
However, we believe that allowing our members such emergency, once-off access to their own withdrawal benefits in order to assist them financially during this difficult lockdown period and immediately thereafter, will NOT detrimentally affect the medium to long term sustainability of their eventual retirement withdrawal benefits.
The matter is very urgent and important, especially given the serious pressure which we all know our fiscus currently faces.
We are also concerned that if urgent additional income support during the current period is not secured for working class families, it might result in social unrest, sporadic instances of which are already occurring in working-class communities due to the hardship which workers are currently facing.
Our urgent request, which we had now formally submitted to the Minister of Finance, is as follows:
That the Minister of Finance issues an urgent emergency Directive, in terms of the regulations of the Disaster Management Act, 2002 (Act No 57 of 2002), to allow our members who are also members of retirement funds, to draw down such emergency financial support, on a once-off basis, from their retirement fund withdrawal benefits.
We re-iterate that this matter is urgent and important and that it has to date not received such urgent attention as was requested by us previously.
We are deeply concerned and disappointed that the matter has not been attended to from the time that it was first raised with National Treasury as far back as 21 March this year, and has accordingly also simultaneously referred the matter to NEDLAC, on an urgent basis, for NEDLAC’s soonest consideration.
We see no reason why our members should suffer during this unprecedented period of crisis, when they actually have enough of their own resources to draw on.
This can be of great assistance to millions of the poorest citizens in our country, especially now that many of them face unexpected and serious levels of new debt.
Issued by COSATU
082 563 6973
COSATU NATIONAL SPOKESPERSON
060 975 6794