Calls for govt to immediately repeal new tax amendment laws
Numsa has described new legislation as the privatisation of workers' money.
JOHANNESBURG - South Africa's biggest union has called on government to immediately repeal the tax amendment laws, describing the new legislation as the privatisation of workers' money.
The National Union of Metal Workers of South Africa (Numsa) has also accused the State of trying to use workers provident funds to help cover the shortfall of an inadequate social welfare system.
President Jacob Zuma this month signed the Tax Administration Amendment Bill, which will prevent the withdrawal of a provident fund lump sum payments from 1 March.
Numsa's General Secretary Irvin Jim said, "It means that workers will be required to use their savings as grants, so that the State doesn't have to pay them. It is a form of privatisation, given that the retirement funds companies are overwhelmingly owned and ruled by financial capitalists."
Last week, the Congress of South African Trade Unions (Cosatu) claimed it would allow government to nationalise pensions.
The trade union federation's Sizwe Pamla said 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."
However, Old Mutual corporate consultant Michelle Acton said it was not a big shift.
"Those benefits fully belong to those individuals. They don't belong to anyone else. That structure is not changing. The only thing that has changing is how that benefit will be paid out when we get to retirement."
RETIREMENT REFORMS EXPLAINED
Head of Best Practice at Alexander Forbes, Michael Prinsloo, says the two major changes include a uniform set of tax deductibility criteria that apply across all pension funds arrangements.
Prinsloo says the reforms are designed to simplify what has been an overly complex pension's regime.
"At the moment there are three types of pension funds, namely pension fund, provident fund and a retirement annuity but they have had different tax deductibility regimes. The system, from March 2016, will be a 27,5 percent maximum deductibility across all three funds."
That means your concept of pensionable salary has fallen away and you may base this contribution on your taxable income or gross salary.
Prinsloo further explained that for pension fund members the only difference is the R350,000 cap.
"There was always an annuity requirement and you could at retirement access one third of your capital as a lump sum and two thirds would be used to purchase annuity."