Media alert

The National Union of Metalworkers of South Africa (NUMSA) on 21 January 2016 submitted the following notice under Section 77 of the Labour Relations Act, around the decision to implement compulsory annuitisation upon retirement from 1 March 2016.

The Reasons for the Intended Protest Action

The National Union of Metalworkers of South Africa (NUMSA) gives notice of its intention to embark upon socio-economic strike action, (“protest action”), in terms of Section 77 of the Labour Relations Act, 1995, (Act 66 of 1995). (“the LRA”), in protest against reforms affecting provident funds as contained in the Taxation Laws Amendment Act 25 of 2015. NUMSA’s reasons and objections are around the decision to implement compulsory annuitisation upon retirement from 1 March 2016.

NUMSA is absolutely clear that we oppose this imposition on principle. In a society in which the majority of working-class people spend their lives in poverty and debt - either unemployed or working for poverty wages - there is no way in which they can accumulate enough money in their retirement funds to provide them with an adequate pension when they retire. 

That is why workers have over many years made it clear through struggle that their choice was for a provident fund system which allowed them to choose whether to take all of their benefit or to use it for a pension. This is a far cry from this compulsory annunitsation system which government is seeking to introduce. 

NUMSA agrees with Treasury that for many workers the prospect of retirement and old age are indeed bleak especially when considered against the background of increasing rates of poverty, inequality and unemployment. 

We are in disagreement however as to the causes and the solutions to this problem. It is our view, and this has been stated in government reviews of post 1994 socio-economic conditions, that the social and economic systemic and structural features of Apartheid South Africa persist in the democratic era. 

These are white monopoly domination of the economy, unemployment, poverty and inequalities largely afflicting the black population, persistently low black working class wages, inferior or absent health, housing, water, sanitation and other essential human services and so on for the majority of the population who are the black working class. 

These problems will be made even worse if Eskom’s proposed 17% increase in electricity tariffs is approved. The nub of Eskom’s argument appears to be that not enough electricity is being used. This in the face of load shedding and campaigns to reduce such usage. The consumer and industry is being asked to pay for saving energy! The jobs bloodbath which is happening throughout manufacturing industry in South Africa would appear to be just the beginning of an economic disaster. 

We contend that Eskom is not a “corporate” entity and should not be expected to act as such. It is public utility which has a huge economic and social role to play and should be treated as such. Whether this increase is agreed or not agreed to, Eskom will be back and we therefore demand that Eskom be de-commercialised.

We are convinced that without simulatneously tackling these features, and therefore leaving the Apartheid labour market and economy virtually intact, it is impossible for any meaningful and transformative reforms of the kind intended in the Tax Amendments to be useful to the black majority of South African workers and who continue to suffer structural and systemic unemployment, poverty and inequalities both at the workplace and in communities. 

While NUMSA acknowledges that similar retirement fund regimes have been implemented elsewhere in the world, we argue that the persistence of Apartheid systemic and structural features in South Africa’s economy and society make such retirement fund regimes completely unworkable, in South Africa. 

Further, it is also relevant to note there are instances where compulsory annuitisation is being reversed, such as in the UK, where reforms are underway to allow workers to take their entire pension as a lump-sum upon retirement. 

A further unworkable proposal relates to the issue of imposing preservation requirements upon changing jobs before retirement. While this has yet to be enacted, it forms an integral part of a package of on-going retirement fund reforms as reflected in relevant Treasury policy discussion documents.

The persistence of colonial wages means that most workers in this country leave employment with a pittance. This means that at retirement the majority of workers in South Africa are left with a provident fund that is wholly insufficient to cover their needs. This is also consistent with the fact that workers’ wages, which are not only insufficient, are also not increasing in real terms in line with inflation.

Moreover the details of the proposed national minimum wage have yet to be finalised and nowhere is there a debate on a living wage.

Against this background, compulsory annuitisation laws will only serve to further deepen the poverty pit for the majority of workers both post and pre-retirement. 

Workers are invariably forced to make withdrawals from their provident funds in order to subsist through unemployment. This is especially so within the context of the absence of viable alternatives through a social security net, such as the “Basic Income Grant”. 

These proposals completely ignore the huge indebtedness (due to super-exploitation and systemic and structural unemployment of the vast majority of the working class – the Apartheid foundations of South African economy and society) of a poverty-stricken population. 

The experience and context of pensioners in South Africa do not reflect those, especially in more industrialised countries with better working conditions and social security systems. Many do not qualify for either a private or state old age pension, and where they do it is wholly insufficient. This is compounded by the insufficient access to free health service, poor public transport and the added responsibility of supporting members of the extended family including adult children and grand-children. 

While the new rules limit annuitisation requirements to accumulated funds in excess of R247,500.00, it would require fund accumulation way in excess of multiples of that amount in order to provide annuitised monthly income that is sufficient to live on. 

Retired workers who have contributed to society with their tax payments will effectively be subsidising the role of government by not “becoming excessively reliant on the state for social assistance”. This also amounts to a windfall gain for finance capital, with reduced reserve requirements to meet the demands for lump sum withdrawals, enabling the generation of higher profits whilst passing on the risks to workers.

Numsa contends that any changes to the present situation with provident pre-empts more holistic and redistributive retirement reforms!

We therefore demand:

That employees have the right to withdraw their full provident fund benefit upon retirement;

A comprehensive social security system to include amongst others the following:

1  A non-means tested state old age pension of fixed at a rate capable of sustaining a decent pension life, per pensioner;

2  The implementation of the National Health Insurance scheme to provide access to free health care which is accessible and of a high quality;

3  A basic income grant capable of purchasing the basic requirements of life, per adult;

4  An extension of the UIF to cover all registered unemployed persons for the duration of their unemployment;

5  A non-means tested child benefit grant.

6  No electricity tariff increases and the decommercialisation of Eskom.

The Nature of the Protest Action

Following consideration of the issues giving rise to the intended protest action, and if no genuine settlement can be reached, NUMSA intends to call upon all employees eligible to engage in protest action in terms of section 77 of the LRA to involve themselves in:

Rallies, demonstrations, pickets (including lunchtime pickets, placard demonstrations, marches and strikes;

Calls for solidarity campaigns with civil society; and other forms of protest activity.

NEDLAC will be advised of the precise nature of the protest action and the date or dates upon which they will take place in the 77(1)(d) notice, if and when this notice is provided. 

Statement issued by NUMSA General Secretary, Irvin Jim, 22 January 2016