Cabinet wants to delay pension reforms by two years

Minister in the Presidency Jeff Radebe says it would allow for further consultation with stakeholders.

Minister in the Presidency Jeff Radebe. Picture: GCIS.

CAPE TOWN - Government is moving to stall the implementation of controversial new retirement reforms following an outcry from unions.

Cabinet decided at its meeting in Cape Town on Wednesday to amend the Taxation Laws Amendment Act to delay the new law's implementation for two years, to allow for further consultation.

The announcement was made during a post-Cabinet briefing in Cape Town earlier today.

The Congress of South African Trade Unions (Cosatu) has threatened to withdraw its support for the African National Congress (ANC) in the looming local government elections and is planning a general strike to get the law scrapped.

Minister in the Presidency, Jeff Radebe, was asked whether the African National Congress (ANC)-led government was bowing to pressure in deciding to put the new law on ice for two years.

"Cosatu does not have to rubber stamp decisions by Cabinet. The reason this amendment has been put forward is because they've raised concerns about the process of consultation."

The new law would make it compulsory for two-thirds of a person's provident fund savings over an amount of R247,500 to be used to buy an annuity, the same provision that applies to pension funds.

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.