The Congress of South African Trade Unions (COSATU) welcomes Parliament’s Standing Committee: Finance’s decision for the two pot pension reforms to come into effect from 1 March 2024. This will provide welcome relief to millions of highly indebted workers, in both the private and public sectors, who will be able to access limited portions of their pensions without having to resign from their jobs nor cash out their entire funds.
The Federation is pleased that Members of the Standing Committee: Finance stood with workers in defence of the 1 March 2024 implementation date after some in industry in pursuit of maximising profits sought to delay these legislative reforms until 2025 and possibly even further.
The engagements have been taking place since COSATU first tabled them at Parliament in 2020. Workers are drowning due to a struggling economy, a 41% unemployment rate, rising costs of living and repo rate hikes. The current pension laws only allow workers access to their pension funds when they retire or in the event of losing their job or resigning. As a consequence, many workers opt to resign and cash out their entire pension funds. The two pot reforms offer a positive balance where workers will be able to access up to R30 000 when the law comes into effect and from then on to access one third of their annual contributions. They will no longer need to resign to have some access to their pension funds.
These reforms will have the added benefit of helping to boost savings in the longer term as workers will no longer be cashing out their entire pension funds but rather accessing a limited portion.
Whilst COSATU is disappointed that Parliament and Treasury did not increase the immediate relief amount to the R50 000 or R40 000 proposed by the Federation, we welcome that this amount has been increased from an initial R0 to R30 000.
In order to ensure that this long sought relief takes place on 1 March 2024, it is critical Parliament move with speed to conclude its remaining processes in the National Assembly and the National Council of Provinces before rising in December in order to allow the President to assent to the Bill and for the remaining administrative processes be undertaken by Treasury, the South African Revenue Service and the pension funds in time.
Workers cannot afford any further delays.
Issued by COSATU
For further information please contact:
Acting National Spokesperson & Parliamentary Coordinator
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