Govern­ment’s pen­sion re­form U-turn

CityPress - - News - HLENGIWE NHLABATHI hlengiwe.nhlabathi@city­press.co.za

Govern­ment is set to scrap cer­tain clauses of the Tax Amend­ment Act to ap­pease labour fed­er­a­tion Cosatu, which made threats to with­draw sup­port for the ANC in the up­com­ing lo­cal govern­ment elec­tions un­less Pres­i­dent Ja­cob Zuma re­pealed the law.

Con­firm­ing for the first time that govern­ment would per­form a U-turn, Min­is­ter in the Pres­i­dency Jeff Radebe told City Press in an in­ter­view on Fri­day that all signs pointed to­wards find­ing a way of “post­pon­ing” the im­ple­men­ta­tion of some of the law’s dis­puted aspects.

In­stead, the fo­cus would be placed on fast-track­ing the im­ple­men­ta­tion of com­pre­hen­sive so­cial se­cu­rity as a safety net for work­ers.

Zuma had asked Radebe to fa­cil­i­tate a res­o­lu­tion to the im­passe be­tween Cosatu and Trea­sury.

Radebe said: “We are tak­ing into con­sid­er­a­tion the is­sues that have been raised by the stake­hold­ers. We are now try­ing to ur­gently find a so­lu­tion. It does ap­pear we need to find a way of post­pon­ing the im­ple­men­ta­tion of some of the clauses that are in dis­pute so that the process of ef­fec­tive im­ple­men­ta­tion is within the con­text of this over­all se­cu­rity sys­tem. We are at the point now of find­ing the ap­pro­pri­ate mech­a­nisms. In the mean­time, Na­tional Trea­sury and our­selves are in dis­cus­sion.”

Zuma did not make any spe­cial an­nounce­ment on the pen­sion re­forms dur­ing his state of the na­tion ad­dress on Thurs­day, ex­cept to ac­knowl­edge Cosatu’s con­cerns and ex­plic­itly state that a so­lu­tion had to be sought. He is said to have been un­aware of how strongly other stake­hold­ers felt about this amend­ment act be­fore he signed it into law in De­cem­ber, and he had “ex­plained him­self” to Cosatu.

Mean­while, Radebe said Fi­nance Min­is­ter Pravin Gord­han may make an an­nounce­ment re­gard­ing the amend­ments dur­ing his bud­get speech on Fe­bru­ary 24.

“It is pos­si­ble that we might have found an am­i­ca­ble so­lu­tion to the mat­ter by then,” he said. The fed­er­a­tion, which raised is­sues about a widen­ing trust deficit be­tween it­self and the ANC-led govern­ment, adopted a twopronged ap­proach in deal­ing with mat­ter – to fight and ne­go­ti­ate at the same time. It urged its mem­bers to hold pick­ets that would cul­mi­nate in a mass march in a bid to force Zuma to re­peal the new pen­sion law.

Af­ter meet­ing Cosatu lead­ers last week Fri­day, Radebe said govern­ment was look­ing at le­gal means to shelve or place a mora­to­rium on spe­cific clauses that trou­bled Cosatu. On­go­ing meet­ings were be­ing held to ur­gently find a so­lu­tion be­fore the law could come into ef­fect on March 1, he said.

“There are two points that are be­ing de­bated. The first is whether there was ef­fec­tive con­sul­ta­tion within the Ned­lac [the con­sen­sus-seek­ing body be­tween govern­ment, busi­ness, civil so­ci­ety and labour] process and the Na­tional Trea­sury.

“The se­cond is that some stake­hold­ers were un­der the im­pres­sion that this act will be re­solved within the con­text of the ex­is­tence of a so­cial se­cu­rity sys­tem for South Africa.”

The new tax law would en­force the an­nuiti­sa­tion of two-thirds of prov­i­dent fund sav­ings on re­tire­ment from March 1. At the mo­ment, prov­i­dent fund mem­bers are able to cash in their ac­cu­mu­lated sav­ings as a lump sum when they re­tire or re­sign. The an­nuiti­sa­tion thresh­old has been in­creased from R75 000 to R247 500.

The sig­nif­i­cance of this change is that low-in­come earn­ers whose sav­ings are below the thresh­old do not re­quire an­nuitis­ing.

Cosatu, which warned of the cat­a­strophic ef­fect of leav­ing the law un­chal­lenged, has ac­cused Trea­sury of hav­ing sneaked the law through Par­lia­ment with­out con­sid­er­ing the fact that no progress had been made in im­ple­ment­ing so­cial se­cu­rity sys­tems, which was mainly the re­spon­si­bil­ity of the depart­ment of so­cial de­vel­op­ment.

The fact that there was no Ned­lac re­port sent to Par­lia­ment on dis­cus­sions around the pen­sion re­forms placed Trea­sury in a com­pro­mis­ing po­si­tion, as it proved there had been no mean­ing­ful con­sul­ta­tion, de­spite the state ini­tially in­sist­ing all pro­cesses had been fol­lowed.

Radebe stressed that the new law could now not be re­pealed, but cer­tain sec­tions could be re­moved.

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