Cape Town - The proposal that will allow workers to access a portion of their pensions should be carefully crafted to help them get out of the debt trap that they find themselves in.
The SA Federation of Trade Unions (Saftu) and Cosatu have welcomed moves to introduce the “two-pot” retirement system, which would allow workers to access at least a third of their pensions while they are still economically active.
Both unions agree that the proposal would provide much-needed relief to many who are already battling to make ends meet.
The National Treasury and SA Revenue Service (Sars) recently published for public comment the revised 2023 Draft Revenue Laws Amendment Bill, and 2023 Draft Revenue Administration and Pension Laws Amendment Bill.
The country’s biggest trade unions argue that the draft bills provide the necessary legislative amendments required to implement the first phase of the “two-pot” retirement system.
Members of the public have until July 15 to comment on the bill, and if passed the system would be rolled out next year.
The proposal has received widespread support from labour unions, economists and the private sector who believe the move would stimulate economic activity.
Another important spin-off is that the “two-pot“ retirement system would provide welcome relief for workers, who have been battling under the pressure of below-inflation salary increases and interest rates hikes by the Reserve Bank.
However, a detailed screening process has to be adopted to ensure that the surrendered funds are used responsibly.
The process should ensure that workers use the funds to get out of debt, and not embark on useless expenditure such as buying cars and funding overseas holidays.
That is why the involvement of trustees is going to be vital to the success of such an initiative.
Trustees of each pension fund should play a critical role in assessing the needs of each worker and ensure that the money accessed is used for the intended purpose.
Cape Times