Under the new two-fund scheme, which allows annual withdrawal before retirement, South Africans will be able to access 10 percent of their pension savings from March 1, 2024.
According to a statement, Cosatu expects this will be welcome relief for millions of heavily indebted workers who will be able to access limited portions of their pensions without having to quit their jobs or withdraw all their money.
The initiative was first presented in Parliament in 2020.
In a statement, Cosatu said workers were “drowning because of the struggling economy, a 41 percent unemployment rate, rising living costs and rising buyback rates.”
Keep in mind that current pension laws only allow employees to access their pension funds if they retire, lose their job or resign.
As a result, the trade union federation adds, many are choosing to resign and withdraw all pension funds.
Starting in March 2024, workers will be able to access up to 30,000 rand (about $1,600) and from then on, a third of their annual contributions, without having to quit their job.
These reforms, says Cosatu, will have the added benefit of contributing to increased savings in the long term, as those in need will not be forced to withdraw all their savings but will have access to a limited portion.
Now the bill must be signed by President Cyril Ramaphosa, the Treasury must issue the necessary regulations and the South African Revenue Service (SARS) must make some adjustments to its work system.
ode/mv