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Rationality of two-year delay in pension Bill questioned

Government claims the legislation is meant to ensure people have an income through their old-age.

Pensioners queue outside of a supermarket in Mitchells Plain on the 1st of the month to collect their SASSA grants. Picture: Thomas Holder/EWN
tax,retirement income
Local

JOHANNESBURG - Following Cabinet’s announcement of an amendment to government’s retirement reforms, the rationality of the two-year delay has been questioned.

This morning, Minister in the Presidency Jeff Radebe announced a halt in the implementation of a law that will oblige people to withdraw only two-thirds of their provident fund when they retire and use the rest to purchase an annuity.

Government claims the legislation is meant to ensure people have an income through their old-age.

Head of product development at Allan Gray, Richard Carter, says it’s disappointing that government has made this sudden change at the last minute.

“We’ve made a bigger problem out of what was, and used that as an excuse to pull back. It is disappointing because it seems to be more of an emotional and a heated issue.”

At present, provident members can cash in all their savings when they resign or retire.

Due to come into effect on 1 March, the new law would only affect contributions after that date.

At the same time, the Congress of South African Trade Unions has threatened to withdraw its support for the African National Congress in the looming local government elections and is planning a general strike to get the law scrapped.

LISTEN: What does the new legislation on retirement income entail? 

(Edited by Winnie Theletsane)

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