Johannesburg - Confused and panic-stricken workers in the public and private sectors are again quitting their jobs to cash in their retirement savings - just over a month before the recently promulgated retirement reforms kick in.
This was the warning by unions on Sunday as they scrambled to allay fears of workers quitting en masse on a similar scale that saw more than 85 000 public servants resigning in the past two years.
The mass exodus left some schools and hospitals depleted.
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In terms of the act, employees registered for pension, provident and retirement funds will be able to withdraw only one-third of their benefit, while the rest would be paid out monthly as an annuity until death. With the current policy, workers are able to withdraw their entire benefit upon resignation or retirement.
Guarantees by the government that provident fund members can still claim all their retirement savings accumulated before March 1, 2016 have fallen on deaf ears.
Public service employees like *Frans, 46, who has been a teacher for the past 20 years, said they mistrusted the government’s intentions and would, instead, resign and withdraw all their savings.
“I want to manage my finances. Withdraw my funds and pay off my debt,” he said. “We have children in tertiary institutions who don't qualify for NSFAS (National Student Financial Aid Scheme), as we also cannot afford the fees.
“If the government says we can’t withdraw all our benefits like before, how am I expected to build a house after retirement, as all we can afford now is to rent?” Frans said.
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Faced with a backlash from unions, the government has sought to calm employees, following President Jacob Zuma’s decision to sign the controversial tax legislation into law.
“All provident fund members will still be able to take all their retirement savings that would have been accumulated as at March 1, 2016 as a cash lump sum when they retire. The conversion of a portion of the retirement money into income at retirement will only apply to new contributions made by those who are younger than 55 when the legislation comes into effect,” said the Presidency in a statement last week.
Unions said the act had sparked a renewed exodus of workers.
Cosatu’s biggest union, the National Education, Health and Allied Workers Union (Nehawu) warned of dire consequences.
“It is now starting the mass exodus, the same panic was there before and we managed to stop it,” said Nehawu first deputy president Mike Shingange.
“We are asking our members to cool down. Once they take their money and leave, it will be difficult to fight if we are not a collective,” he said.
The National Union of Metalworkers of SA said it was fielding calls from enraged workers in the industrial sector who were also resigning as they felt undermined by the government.
The union’s national treasurer, Mphumzi Maqunqo, said their members understood the law and what it meant, but did not trust the government.
“Workers are calling us with this challenge. We are persuading members not to resign. We can only guide them, but the reality is that they know and have an experience of a government that can’t manage our tax money,” said Maqunqo.
He added that the sector had seen close to 30 000 resignations since 2013, when the amendments were still being discussed.
The National Union of Mineworkers said it was concerned about the long-term problems presented by the retirement reforms. Spokesman Livhuwani Mamburu said few underground mineworkers lived beyond five years after retirement due to health issues, and many wouldn't live to enjoy their retirement savings.
Cosatu has vowed to fight the reforms to the bitter end, describing the law as a “provocation” of workers by the ANC-led government, which wanted to deprive workers of their “hard-earned deferred wages”.
Labour analyst Tony Healy said the new laws were in everyone’s best interest.
*Not his real name
The Star