Cosatu has called for a moratorium on the government reforming the retirement system.
The federation, like some of its affiliates, is warning that if the state does not halt its plans until workers understand what the changes are, it will down tools across the country.
Cosatu president S’dumo Dlamini said yesterday that the federation’s leaders would meet Finance Minister Nhlanhla Nene on August 25 to discuss concerns and ask that an element of voluntary participation be included in the reforms.
He said workers did not understand the changes the government wanted to make and were withdrawing their pension funds at an alarming rate in fear that their money would be “nationalised”.
The Treasury is attempting to introduce mandatory pension preservation. But union members say they are opposed to the move because they will not be in control of their money when they retire.
The changes are meant to be introduced by March next year.
The Treasury believes its proposals will help ensure that South Africans are not left with nothing once they retire. It had initially suggested that after laws were introduced to prevent the withdrawal of pension savings before retirement, that a person be allowed one withdrawal a year for each preservation fund. This would apply to up to 10 percent of the value of the savings. But now it is proposing one withdrawal per person per year to reduce the number of withdrawals.
Members of pension and retirement annuity funds can take up to a third of their savings as a cash lump sum at retirement, of which the first R500 000 is tax-free. The remaining two-thirds must be used to buy an annuity.
Besides the moratorium, Cosatu wants workers who do not earn much to be allowed to have access to their future savings if the need arises.
“We are calling on government to say because there is this uncertainty… we must allow for a space of clarity in these areas. We are seeing the bleeding of the labour market,” Dlamini said. “You have fund managers who are confusing the matter by saying we can invest your money better.”
Cosatu deputy general secretary Bheki Ntshalintshali pleaded with workers not to resign and cash in their pensions. “There’s no guarantee that your employer will take you back… In fact, it will be the cheapest form of retrenchment.”
He cited an example of a company in Ekurhuleni where all the employees resigned and cashed in their pensions. The next day they asked for their jobs back and were told by the employer they could do so, but only through a labour broker.
Ntshalintshali admitted that the government and the unions were to blame for the lack of information reaching workers on changes to pension preservation. He painted a bleak picture if the message did not get to employees soon and there was a situation where the R1 trillion in the Government Employees Pension Fund was depleted.
“Can you imagine, with all workers resigning, what impact it will have on the economy?” he asked.