COSATU disappointed that some pension funds chose to exploit two-pot system by charging unnecessary fees for withdrawals

JOHANNESBURG - The Congress of South African Trade Unions (COSATU) said it was disappointing that some pension funds had chosen to exploit the two-pot pension system by imposing unnecessary fees on members.

Since coming into effect earlier this year, the South African Revenue Service (SARS) has received 2.2 million applications for withdrawals worth billions of rands.

Now the Financial Sector Conduct Authority (FSCA) is investigating charges on the withdrawals.

COSATU said the matter was also under review at NEDLAC (National Economic Development and Labour Council).

The trade union federation's Matthew Parks explained:

"Most fees have been around R300 but there've been a few pension funds that have charged double that amount. And when we have interrogated them and asked can they justify it, we're yet to be given a concrete answer."

Parks said the two-pot system had highlighted the need for a discussion around fees.

"The Financial Sector Conduct Authority says they believe they can intervene on this issue. Whatever it is, we need to put some barriers, yes companies must make money, they must employ staff, fund systems but it shouldn't be exorbitant profiteering off workers who are deep in debt or pension fund members who really need to have as much money saved."

Parks said they hope talks over the next two months would create a roadmap for this.