The uni­ver­sal

CityPress - - Business -

Low-wage earn­ers will, in the­ory, re­tire on a com­bi­na­tion of the old age grant and NSSF an­nu­ities, while the rich will re­tire on such an­nu­ities as well as what­ever ad­di­tional pen­sion they have ac­cu­mu­lated.

“Clearly, the rich have am­ple space to top up, whereas poor peo­ple’s only real route to a de­cent pen­sion is through the manda­tory sys­tem,” said Dan­gor.

“We will see a lot of de­bate on this and the time­frame is tight. In Septem­ber 2017, we want agree­ment on the doc­u­ment and the process of im­ple­ment­ing it,” said Dan­gor.

This is be­cause Trea­sury’s re­tire­ment re­form bill has been sus­pended un­til Fe­bru­ary 2018.

This will in ef­fect turn prov­i­dent funds into pen­sion funds by en­forc­ing the pur­chase of an­nu­ities in­stead of cash­ing out lump sums on re­tire­ment.


Labour fed­er­a­tion Cosatu drove a cam­paign against the an­nuiti­sa­tion rule, say­ing the com­ple­men­tary parts of the com­pre­hen­sive so­cial se­cu­rity sys­tem first need to get sorted out.

The an­nuiti­sa­tion of rel­a­tively small prov­i­dent sav­ings would lead to very low monthly in­comes and pose the threat of kick­ing some peo­ple out of the old age grant sys­tem, with­out im­prov­ing their in­come.

“I would not do it ei­ther,” said Dan­gor of an­nuitis­ing small re­tire­ment sav­ings. “Ideally, it should be part of a pack­age.” A pol­icy ex­pert in­volved in Ned­lac dis­cus­sions said that the mere fact that some­thing had been tabled was al­most more im­por­tant than the con­tent. He called the 2017 dead­line “wildly un­re­al­is­tic”. “It is just a dis­cus­sion pa­per. A lot of it is vague. But at least it gets the ball rolling,” he said.

“This will eas­ily be a five-year process, but at least we can have a dis­cus­sion and get the de­part­ment of so­cial de­vel­op­ment and Trea­sury to talk.”

The four years of stalemat­ing around the pen­sion fund have been blamed squarely on the de­part­ment and Trea­sury. “Na­tional Trea­sury is as re­lieved as we are that it is now at Ned­lac,” Dan­gor said. “It took us four years to agree in govern­ment.” A newer ver­sion, com­pleted in 2015, was aban­doned af­ter a min­is­te­rial com­mit­tee found that the 2012 pa­per had been “more aligned to the Con­sti­tu­tion”.

The 2015 pa­per was never re­leased, but it was ap­par­ently more fis­cally con­ser­va­tive.

This week, Cosatu wel­comed the dis­cus­sion doc­u­ment’s re­lease as a “push against the ne­olib­eral of­fen­sive from Trea­sury in par­tic­u­lar”.

“Iron­i­cally, it was the min­is­ter of fi­nance who tabled the 2012 pa­per,” said Dan­gor.

The 2015 pa­per ques­tioned the most ba­sic de­sign for the NSSF – whether it should be a de­fined ben­e­fit or a de­fined con­tri­bu­tion fund, said Dan­gor.

In a de­fined ben­e­fit sys­tem, the pay­outs are pre­de­ter­mined, ir­re­spec­tive of what hap­pens to the fund’s in­vest­ments. In the lat­ter, the pen­sioner car­ries the risk of their pen­sion ris­ing or fall­ing with the mar­kets.

“The de­fault po­si­tion has re­verted to the NSSF be­ing a de­fined ben­e­fit fund, which is a more


WAIT­ING FOR A BET­TER DEAL Af­ter cast­ing her vote in Diep­sloot on Au­gust 3, pen­sioner Mon­ica Ngubane (73) said she felt hope­ful that do­ing so would im­prove her life. She has never missed a vote

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