Zuma signs off controversial tax legislation

It’s strongly criticised by Cosatu, which claims it will allow government to nationalise pensions.

FILE: President Jacob Zuma. Picture: GCIS.

JOHANNESBURG - The Finance Ministry says President Jacob Zuma has now signed into law new tax legislation that will affect the taxable deductions from retirement income.

The new law has been strongly criticised by the Congress of South African Trade Unions (Cosatu), which claims that it will allow government to nationalise pensions.

The trade union federation's Sizwe Pamla says Zuma's decision is an attack on workers.

"Cosatu strongly condemns the signing of this legislation into law by President Jacob Zuma. We feel like this was an act of provocation by government, especially considering the fact that it is a betrayal of the workers."

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.

But personal finance expert Maya Fisher-French says it won't have any impact on people who have already started pensions or provident funds.

"Going forward, from 1 March onwards, any contributions made will then not be able to be paid out as a full lump sum in retirement. It will only be paid out according to the pension fund rules of one third that you can take as cash and two thirds that will have to be annuitised."