Pension deadlock: Cosatu hopeful

Sizwe Pamla, the national spokesman for Cosatu, was responding to reports that Minister in the Presidency Jeff Radebe (seen above) said the government planned to postpone implementation of some of the new tax law's disputed aspects. File picture: Siyabulela Duda, GCIS

Sizwe Pamla, the national spokesman for Cosatu, was responding to reports that Minister in the Presidency Jeff Radebe (seen above) said the government planned to postpone implementation of some of the new tax law's disputed aspects. File picture: Siyabulela Duda, GCIS

Published Feb 16, 2016

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Durban - Labour federation Cosatu, who are at loggerheads with the government over pensions reforms, are “cautiously optimistic” over reports that the government has bowed to their demands and is set to scrap certain clauses of the Tax Amendment Act.

Sizwe Pamla, national spokesman for Cosatu, said the federation would only celebrate when the government presented them with definitive assurances that aspects of the of the Tax Amendment Act - such as restrictions on workers cashing out more than a third of their retirement savings - were repealed.

He was responding yesterday to reports that Minister in the Presidency Jeff Radebe said the government planned to postpone implementation of some of the new tax law’s disputed aspects.

Cosatu had threatened to withdraw support for the ANC at this year’s upcoming local government elections unless President Jacob Zuma repealed the legislation. They had also vowed mass protests to crush what they called the “condescending law”.

Pamla said the federation was hopeful that the government had seen the way and had finally listened to the workers.

“The issue, as we have pointed out, is that there is a trust deficit between us and the State. We raised these issues before the law was passed, yet they proceeded. We are hopeful that we will find a solution, but only when we see concrete action, or something tangible, will we believe,” he said.

Chief among Cosatu’s gripes with the new act was that people were now no longer able to withdraw 100 percent of their pensions.

“That aspect is very problematic. We understand why workers need their money. We need to talk first about a comprehensive social security, because right now, workers don’t earn enough to save. In fact, government policy is actually repealing workers’ wages.

“An average worker is unable to save any money to buy a house, or pay for their kids’ education. It is only when they retire that they are able to cash in their money and buy themselves a house, or they send their kids to tertiary school. If you tell them they no longer have access to their money, you are denying them an opportunity to support their families,” Pamla said.

Last week, government gave its first indication that it had bowed to the pressure from Cosatu.

In an interview with City Press, Radebe said focus would be placed on fast-tracking the implementation of comprehensive social security as a safety net for workers.

Radebe said that while they were hoping for an amicable solution, he stressed that the new law could now not be repealed, but certain sections could be removed.

“We are taking into consideration the issues that have been raised by the stakeholders. We are now trying to urgently find a solution. It does appear we need to find a way of postponing the implementation of some of the clauses that are in dispute. We are at the point now of finding the appropriate mechanisms. In the meantime, National Treasury and ourselves are in discussion,” Radebe told City Press.

Pension experts welcomed the new tax laws, saying they encouraged people to save towards retirement and was a step in the right direction for less dependency on the state for social pensions.

The Tax Amendment Act kicks in on March 1, and was meant to force those with provident funds to put two-thirds of their savings into an annuity when they retired.

Last year, in anticipation of the legislation, more than 26 000 public servants resigned from the Government Employment Pension Fund, fearing they would not have access to their savings.

DAILY NEWS

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