COSATU will present its submission on the Pension Funds Amendment Bill to Parliament’s Standing Committee: Finance from 09h00 today -19 May 2021 during its virtual hearings.
Millions of workers have lost wages during this pandemic and the deepest economic recession the world has faced in a century. Workers have been sent home without their meagre salaries, unable to feed their families or pay their loans. Many have lost their homes as a result.
This is happening despite many workers having savings available in their pension funds. COSATU requested Treasury and Parliament in May 2020 to allow, and if needs be the legislation will have to be amended to allow workers to access limited portions of their pension funds to enable them to survive this unprecedented economic crisis. COSATU welcomed the commitment announced in Parliament in October 2020 by the Minister for Finance to table an Amendment Bill to effect this in 2021. COSATU is deeply worried that this has not happened, despite the 1 October 2021 implementation date commitment in serious jeopardy.
The Federation welcomes the tabling of the Pension Funds Amendment Bill, a Private Member’s Bill, in Parliament. It is a step forward in the right direction and responds to COSATU’s call to allow workers access to a portion of their pension funds.
COSATU believes that the Bill does need to be amended to address several key matters:
· The proposed 75% portion of pension funds that workers could loan is too high. If fully utilised it could leave workers with very little pension funds left when they retire. It needs to be reduced to a more sustainable level, e.g. 30% and/ or R30 000.
· Workers need to be allowed the choice between taking a loan from their pension funds or a simple withdrawal that need not be paid back. Most workers are heavily indebted and cannot afford further debt.
· Any loans or withdrawals from pension funds for workers who have lost wages or are experiencing financial distress should not be taxed. Government should not profiteer from workers’ miseries. Workers’ pension funds are often so little that they should not be reduced any further by tax.
COSATU is currently engaging with Treasury on these and other critical matters that need to be included in an Amendment Bill. We hope that consensus can be achieved. However, these engagements need to be concluded as soon as possible. Workers cannot afford any further delays.
It does not materially matter whether it is a Private Member or a Treasury Bill. What matters is that this matter be concluded quickly so that desperate workers can be helped in their moment of greatest need.
Issued by COSATU.
For comment please contact: Matthew Parks- COSATU Coordinator
Cell: 082 785 0687