Johannesburg - A bill to put the controversial retirement reforms on ice will be tabled in Parliament as a matter of urgency, Cabinet announced on Thursday.
This follows threats from labour that they will down tools as they were not consulted on the changes as claimed by the Treasury.
“A number of organisations and individuals have expressed concern about the implementation of the new changes and have made representations to the government about the implementation.
“It is apparent that despite the extensive consultation processes which were embarked upon before the law was passed that those concerns still exist and that those concerns have to be addressed urgently to ensure that when the law commences the changes to the provident fund benefits will be implemented smoothly and efficiently,” the Cabinet said in a statement.
The government is suggesting that the reforms now be implemented in two years’ time.
This is the second time retirement reforms will be postponed following pressure from labour, especially Cosatu and the National Union of Metalworkers of SA. The federation believes that workers should be allowed to access all their money when they retire, which is often done to pay off debt or buy a home. The government had introduced the changes to force a culture of saving.
According to a statement circulated by the Treasury to stakeholders and seen by Independent Media, the government is proposing that changes to tax remain in place. At the moment, provident fund members pay more tax than those belonging to pension funds..
“All tax-related measures, including the harmonised 27.5% tax deductions (up to R350 000) on contributions to any retirement fund, will be implemented for all retirement funds from 1 March 2016,” it reads.
It says all stakeholders will be party to determining the design of annuitisation after two years.
Cosatu will decide next week at its central executive committee if it supports the proposals and will no longer go on strike.
LABOUR BUREAU