The pen­sions dilemma is still with us

CityPress - - Voices -

Labour fed­er­a­tion Cosatu is wrong on the changes to the rules gov­ern­ing prov­i­dent funds. At the fed­er­a­tion’s in­sis­tence, govern­ment this week post­poned the im­ple­men­ta­tion of changes that at­tempted to use tax laws to get re­tirees to save for longer by mak­ing it com­pul­sory to buy an an­nu­ity with your prov­i­dent fund.

Prov­i­dent fund hold­ers would have been made to suf­fer the stick of puni­tive tax rates to pay mem­bers out. The car­rot was meant to be the tax break for work­ers buy­ing an­nu­ities.

The pur­pose of the law is good: to en­sure work­ers save for the ex­tended lives we now live. But Cosatu says work­ers should be al­lowed to ac­cess their money with­out fac­ing puni­tive tax rates. In ad­di­tion, the struc­ture of the new sys­tem would have meant that work­ers would, in many cases, not have been able to get a state pen­sion.

Cosatu was not swayed by the car­rot of a bulkier salary packet through the tax breaks. Govern­ment stepped back from the bat­tle­field. The fight has been post­poned, but not the dilemma: mil­lions of South Africans still en­ter their golden years with­out a de­cent pen­sion. And work­ers are re­sign­ing to cash out pen­sions be­cause life is get­ting too ex­pen­sive.

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