‘Cosatu’s claim of govt nationalising pension funds is nonsense’
Cosatu says the law, affecting the taxable deductions from retirement income, amounts to an attack.
JOHANNESBURG - National Treasury says the Congress of South African Trade Unions (Cosatu's) claim that government is nationalising pension funds is 'nonsense'.
Cosatu says the new law, affecting the taxable deductions from retirement income, amounts to an attack on workers.
But the Finance Ministry says this law will be beneficial for workers as it ensures they don't take their retirement out as a lump sum, but rather have some money later in stages, avoiding deficits later on in life.
Deputy Director General for the Tax and Financial Sector, Ismail Momoniat, says the government will have a communication campaign to show workers what the law will require and the benefits of it.
"Take only one third as a lump sum and two thirds as a monthly income, annuity as we called it. So we've designed the system so that it will serve the interest of people who save."
But he says those who want to save or take out their retirement for any other reasons after they stop working must save their money in another fund.
"If you're going to save for retirement, you can't enjoy the tax benefit fully and then and expect to take the money out all in one time. That is the deal government is doing with the members in society."
Cosatu says the Finance Ministry cannot make decisions about workers money without their permission.
Cosatu says workers need to understand changes in tax legislation and be given the chance to agree to them before government makes reforms that are enforceable by law.
Cosatu spokesperson Sizwe Pamla says workers need to be part of decisions that affect them.
"They are given a chance to say 'yes' because this is their money. These provident funds are not government provident funds, they are workers' provident funds. Anytime you take decisions on behalf of workers, and you are leaving workers behind, we as Cosatu don't support that."
Momoniat says a communication campaign must still be carried out.
"I would like to appeal to our friends in Cosatu not to sensationalise this issue. Because on the one hand there is a real benefit to their members as well; we should not deny their members who save towards the provident fund from the tax deduction."
At its national congress last year, Cosatu warned the African National Congress (ANC) not to sign the Bill before negotiations at the National Economic Development and Labour Council (Nedlac) were completed.
Cosatu says 85,000 of its members resigned when the Bill was first proposed out of fear they would lose their pension funds.
The union claimed this means people would lose control of some of their pensions.