State robbery or rescue?

THERE was a furore after president Jacob Zuma signed into law the Taxation Laws Amendment Act of 2013. Cosatu denounced it thus: “The workers reject the notion perpetuated by this action that a tiny elite of government bureaucrats and mandarins are better placed to decide and dictate to workers‚ when and how to spend their deferred salaries.”

Numsa, in belligerent mood, said, “As if all this was not bad enough, the South African capitalists, who daily rob workers of the fruits of their labour, have convinced the ANC government to let them carry on robbing workers even after they stop working, by stealing from the small amount of their pitiful wages which workers have saved for their future.”

Let’s look at the amendment and what it seeks to achieve. As things are, workers who contribute to a provident fund can get all their money when they retire. Under the new law they will only get a third, with the rest converted into a monthly payment to the member until they die. Government’s example: If you retire with R300 000 due to you, you may only get R100 000 as a lump sum, with the other R200 000 converted into an annuity for a monthly pension until you die. The government seeks to make the provident fund the same as the pension and retirement annuity funds which are already doing this and to “prevent them (retirees) from spending their retirement assets too quickly and becoming excessively reliant on the state or their families for support”.

The unions are up in arms for two reasons - the choice is taken away from the workers and the state is trying to run away from its obligation to offer social security for citizens by making them pay for their own old age ‘grants’. “This form of privatisation of retirement is a more toxic privatisation than most others as it uses the workers’ own money,” says Numsa. This means contributions stay in the hands of companies running these provident funds, maximising their profits for longer. Government says most retirees have provident funds that don’t exceed R247 000, the minimum amount before the pension has to be annuitized. So if you are due R246 000 you can get it all at once, but if you have R248 000 you will get R82 666 as a lump sum and the rest will be converted into a monthly payment. They don’t say how much that will be per month as ‘until you die’ is pretty open-ended.

Are the unions spot-on or are they just being obstructionist? You tell me.