As millions of South Africans gear-up to tap into their retirement savings under the new two-pot retirement system which kicks in on September 1, the South African Federation of Trade Unions (Saftu) says the scheme is a raw deal for workers.
IOL reported on Thursday that new data suggests that South Africans are less interested in drawing from their retirement savings through the two-pot retirement system.
It is less than two weeks to go before many South Africans can take advantage of the two-pot retirement system, but it seems that the idea has become less desirable as initially thought.
In an interview with broadcaster Newzroom Afrika, general secretary of Saftu, Zwelinzima Vavi said the scheme is actually “a scam”.
“Saftu maintains a view, and the final analysis in particular when you look at the rules applying to this (two-pot system) about how much you can access of your retirement funds – the 10 percent kept at R30,000. We have taken a view that this is a scam. This is a statement to mislead workers. This is government typically giving on one hand and taking on one hand,” said Vavi.
“This is about raising expectations to the entire working class that government is doing something about the fact that it knows that so many South African working people are trapped in unbelievable levels of debt. Government appears, says it is going to be doing something to relieve them from the financial stress, but it is actually not doing so.
“This is a scam for government to raises taxes. This is a cruel act on the part of the State where they want to tax even retirement funds of workers.”
Vavi, the outspoken former general secretary of the Congress of South African Trade Unions (Cosatu) said Saftu is mooting the rollout of a campaign to stop government from taxing pension and retirement funds.
“In reality, no one will get the R30,000. After tax, workers will get anything between R17,000, R15,000 or R19,000, depending on the percentage at which they are being taxed. That is why we have rejected the scheme,” said Vavi.
IOL reported that research by Old Mutual suggested that fewer people plan to dip into their retirement savings early.
The data revealed that the number of working South Africans with a retirement saving provision (income R8,000 - R119,000) who said they were likely to withdraw their savings had dropped significantly by 10%, from 62% in 2023 to 52% in 2024.
More information and education about the system has dampened people’s need to take a slice out of their retirement savings, said Vuyokazi Mabude, head of knowledge and insights at Old Mutual.
IOL