The Congress of South African Trade Unions (Cosatu) is celebrating Parliament’s “historic passage of the Pension Funds Amendment (PFA) Bill, one of two progressive amendment bills that will enable the long-sought Two Pot Pension Reforms to take place on September 1, 2024.”
According to Parliament, the two-pot retirement system aims to provide flexibility for fund members to access their retirement savings during emergencies, without necessitating resignation.
The Two-Pot retirement system received its final stamp of approval from the National Assembly on Thursday after considering technical amendments made by the National Council of Provinces (NCOP).
The PFA Bill which was amended by the NCOP, and will now go to the President, Cyril Ramaphosa for assent, Cosatu said.
According to Cosatu, the other Bill, the Revenue Laws Amendment Bill, has already been adopted by both Houses of Parliament.
"Cosatu has been engaging in the Two-Pot Pension Reforms with the Treasury and Parliament since May 2020. We are pleased that whilst we may not have achieved everything we proposed, not only have we reached a consensus on the key matters, but legislation providing for the reforms has been adopted by Parliament, and there is an agreement between the government, Parliament, Cosatu, and the pension funds for implementation on September 1, 2024," the union federation said.
Cosatu said it welcomed the support it received from Members of Parliament, in particular from the ANC and the Chairpersons of the Parliamentary Committees on Finance, Joe Maswangayi and Yunus Carrim, as well as the Minister and Deputy Minister for Finance, Enoch Godongwana and David Masondo.
It said: “Without a doubt, workers have a firm and reliable ally in the ANC.”
"Workers are highly indebted due to slow economic growth, the rising costs of living, and having to support relatives in an economy battling a 41% unemployment rate.
"The current pension laws are excessively inflexible, only allowing workers access to their pension funds upon retirement, losing their job, or resignation. Consequently, many workers opt to resign to cash out their entire pension funds leaving them unemployed and with no savings left," Cosatu said.
The federation said the Two-Pot Reforms provided a progressive compromise and fair balance where workers will have access to a portion of their pension funds whilst remaining employed.
"This will allow workers to access 10% up to R30 000 of their existing savings when the law comes into effect on September 1, 2024, and from then on once a year, access to a third of future savings. Workers will retain access to existing savings.
"These will enable workers to remain employed, receive the equivalent of a thirteenth cheque on 1 September and once a year going forward, and have more savings when they retire," it said.
Cosatu welcomed the “critical amendments made to the Bill by Parliament to ensure all workers, public and private sector, are included in the Two Pot Pension Reforms.”
"What is critical now is for Parliament to ensure the President receives the Bills as a matter of priority enabling him to assent to them shortly. This will then allow the Treasury to promulgate, SARS to adjust its tax systems and the pension funds to amend their rules and put in place the necessary education and administrative measures for workers seeking this relief.
"We are confident we are on track, and all deadlines will be met to ensure implementation on September 1, 2024. Workers have been waiting for this relief since 2020. We will not disappoint them," it said.
Meanwhile, while there’s has been support for the Two-Pot system, critics have warned about the negative impact this might have for some pensioners during retirement.
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