Cosatu: Govt U-turn on pension laws is only a partial victory

Cosatu has strongly opposed the changes, claiming they amount to the nationalisation of pensions.

Cosatu House. Picture: Govan Whittles/EWN.

JOHANNESBURG - The Congress of South African Trade Unions (Cosatu) says it scored only a partial victory after government's climb-down over changes to pension laws.

This morning, Presidency Minister Jeff Radebe announced Cabinet had decided to postpone the implementation of changes - to how provident fund money can be paid out - by two years.

Cosatu has strongly opposed the changes, claiming they amount to the nationalisation of pensions.

Cosatu's Sizwe Pamla says they'll continue to fight any effort to make it impossible for people to withdraw more than a third of their provident fund when they retire.

"Where do they expect people to get money to buy houses? Or to save for their children's education? To say people throw their money away is an insult to the workers who spend their money building houses."

But personal finance journalist Maya Fischer-French says government's aims have been misunderstood.

"What surprises me is that there is still that belief that it's related to compulsive preservation and that people would not be able to access their money when changing jobs. That's not the case at all; we have a situation of misinformation and misunderstanding."

Cosatu had threatened to withdraw its support from the ANC if the new law had gone ahead.

Furthermore, Pamla says it's wrong for government to try and take money that belongs to workers.

"When you look at township and rural people they tend to play stokvels and other saving schemes because, with the little they have, they appreciate that they need to save it.

Fisher-French says today's decision could hit pension companies hard.

"The cost will run into billions for these changes. There are complicated changes that they would have to be able to transfer funds from and there will be standardisation."

Government now has to get legislation through Parliament before March to prevent the new law from taking effect.