Johannesburg - So angry is Cosatu at the Treasury’s insistence of going ahead with its retirement savings reforms that it is threatening to withdraw its support for the ANC in next year’s local government elections.
Cosatu estimates that more than 85 000 public servants have resigned from their jobs as they fear that the changes will result in their pensions being “nationalised”.
Not only does this put additional strain on service delivery and increase the unemployment rate, but it has also led to union membership numbers decreasing.
“If there was an issue that Cosatu is prepared to do battle over, even relooking its support for the ANC in next year’s elections, it is this one,” the federation’s spokesman, Sizwe Pamla, told Independent Media on Monday.
In October last year, the Treasury announced a moratorium on the reforms for a year. This followed pressure from labour and civil society as they believe that the retirement system cannot be changed without comprehensive social security for all. But the government is no closer to introducing a comprehensive security plan which it undertook to do a decade ago.
The Treasury informed Cosatu in a meeting last week that it was going ahead with the Taxation Laws Amendment Act in 2016 as the moratorium was meant to prepare employees and not make any actual changes to the reforms.
“It was about postponing the inevitable for them. We met with them last Tuesday where we made it clear we have deadlocked,” Pamla said.
The proposed law is meant to encourage workers to preserve their retirement savings by introducing mandatory pension preservation. But many believe this will lead to the government “nationalising” their money because they will not have easy access to their future savings after the reforms are introduced on March 1 next year.
“This bill is meant to coerce and force workers to save by force. There is no government or department that should be allowed to pass laws that are meant to dictate to citizens and workers how and when they should spend their hard-earned money,” Cosatu said.
The federation has been at loggerheads with the Treasury over a number of matters, often accusing it of behaving like a super ministry.
The Treasury has also earned the ire of labour as it has on a number of occasions bypassed processes at the National Economic, Development and Labour Council (Nedlac) which is meant to decide on socio-economic policy.
But Treasury spokeswoman Phumza Macanda said they were pushing ahead with the reforms as many employees stood to benefit.
“Over a million workers stand to benefit from a tax deduction on their own contribution to retirement funds, and who will end up with a higher monthly take-home pay as a result.
“In return, to enjoy the benefit of the tax deduction, those receiving the tax benefit are expected to annuitise two thirds of the retirement savings on retirement,” she said.
She also said public servants were resigning because of a lack of understanding of the intent of the reforms as well as high indebtedness.
“We will continue to engage with Cosatu and all other stakeholders to improve the retirement system in South Africa, and ensure that it serves members of retirement funds better,” Macanda said.
The federation will decide at its national congress next week how to proceed with its push-back campaign. But a threat to withdraw support from the ANC will hit where it hurts as the party is already concerned about how it will perform in the country’s metros.
Labour Editor
* Use IOL’s Facebook and Twitter pages to comment on our stories. See links below.