COSATU celebrates President Cyril Ramaphosa’s historic signing of the Pension Funds Amendment Bill into law (Two Pot Pension Reforms)
21 July 2024
The Congress of South African Trade Unions (COSATU) celebrates President Cyril Ramaphosa’s historic signing of the Pension Funds Amendment (PFA) Bill, one of two critical Amendment Acts that will enable the long sought Two-Pot Pension Reforms to take place on 1 September 2024. The other Act, the Revenue Laws Amendment Act, has already been promulgated into law. This will provide invaluable relief to millions of workers and their families who are drowning in debt and battling to cope with the rising costs of living.
COSATU has been engaging on the Two-Pot Pension Reforms with Treasury and Parliament since May 2020. We are pleased that whilst we may not have achieved everything we proposed, we have reached consensus on the key matters and legislation providing for the reforms has been adopted by Parliament and signed into law and there is agreement between government, Parliament, COSATU and the pension funds for implementation on 1 September 2024.
We welcome the continuous support we have received from Members of Parliament, in particular from the African National Congress. Without a doubt, workers have a firm and reliable ally in the ANC.
Workers are highly indebted due to weak economic growth and needing to support relatives in a 42% unemployment rate economy. The existing pension laws were excessively inflexible only allowing workers access to their pension funds upon retirement, losing their job or resignation. Consequently, many workers resigned to cash out their entire pension funds leaving them unemployed and with no savings left.
The Two-Pot Reforms provide a progressive compromise and fair balance where workers will have access to a portion of their pension funds whilst remaining employed. This will allow workers to access 10% up to R30 000 of their existing savings when the law comes into effect on 1 September 2024 and from then on once a year, access to a third of future savings. Workers will retain access to existing savings. These will enable workers to remain employed, receive the equivalent of a thirteenth cheque on 1 September and once a year going forward and have more savings when they retire.
COSATU welcomes amendments made to the PFA Act by Parliament to ensure the Government Employees, Transnet, Post and Telecommunications Pension Funds are included in the Two-Pot Reforms. These were key to ensure all workers are included in the Two-Pot Reforms.
What is critical now is for Treasury to promulgate, SARS to adjust its tax systems and the pension funds to amend their rules and put in place the necessary education and administrative measures for workers seeking this relief. COSATU is working with Treasury, SARS, the Financial Sector Conduct Authority, ASISA and pension funds through Nedlac to ensure a smooth implementation on 1 September. We are pulling out all stops to ensure we are on track and all deadlines are met to enable implementation on 1 September 2024.
Workers have been waiting for this relief since 2020. We dare not disappoint them. Once implementation is concluded on 1 September, further engagements will take place with government and Parliament on additional critical pension reforms giving further relief to workers and their families.
Issued by Matthew Parks, Parliamentary Coordinator, COSATU, 22 July 2024
