Picture: THE TIMES
Picture: THE TIMES

Cosatu says it will keep fighting any amendments to the provident fund rules until the government has a sustainable social security plan in place.

The labour federation was reacting to the Treasury’s proposal that the implementation of the contentious changes to provident funds be postponed by another year until 2019.

The changes are contained in the new draft Taxation Laws Amendment Bill published for public comment.

The amendments, first proposed in 2015, seek to transform provident funds into schemes such as pensions and retirement annuity funds.

To do this, the Treasury wanted provident fund members, upon retirement, to be entitled to withdraw only a third of their benefits as a lump sum, and wanted to annuitise at least two-thirds.

Cosatu threatened to strike over the changes, saying the government had no right to compel workers to annuitise their savings, especially without proper consultation with labour and other partners.

The uproar has forced the Treasury to postpone the implementation of the amendments to 2018.

"The postponement was done in order to provide sufficient time for the minister of finance to consult with interested parties, including the National Economic Development and Labour Council [Nedlac], regarding the annuitisation requirements for provident funds after the publication of the comprehensive policy document on social security, and to report back to Parliament on the outcome of those consultations no later than August 31 2017," said an explanatory memo.

However, whether the government would meet the 2019 deadline depends on how fast a comprehensive social security plan is tabled.

Labour federations have expressed displeasure at the pace of the talks at Nedlac, which are meant to help formulate the plans.

The government has been promising to deliver the comprehensive paper for more than a decade, with some analysts suggesting the funding model for such a social security plan was the stumbling block.

Cosatu parliamentary co-ordinator Matthew Parks confirmed that talks at Nedlac were at an early stage.

"Engagements at Nedlac are still in the early stages. But we are convinced that we can find each other on a sustainable comprehensive social security plan that will cover all South Africans," Parks said.

He said that Cosatu would not agree to any changes blocking workers from accessing their provident funds during their time of need, emergency or unemployment.

"These are workers’ hard-earned and deferred wages," Parks said.

The government is in the meantime continuing to grapple with a huge social grants bill that includes welfare provision to pensioners over the age of 60.

According to the South African Social Security Agency, more than 3.3-million people were receiving old-age grants as of April 2017.

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