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Gordhan: Govt prefers consensus approach to pension laws

Mar 15 2016 21:15
Dane McDonald

Cape Town – The government prefers a consensus rather than an adversarial approach on the Tax Laws Amendment Bill, Finance Minister Pravin Gordhan told Parliament on Tuesday.

“Let us focus our minds on firstly completing the consultation on the design on annuitisation and savings through annuitisation so that the views of workers and various constituencies can be taken into account,” Gordhan told MPs in a National Assembly debate on the Bill.

The Bill was referred to the National Council of Provinces on Tuesday in the first step towards amending some provisions of the Taxation Laws Amendment Act after an outcry from unions over new pension withdrawal rules.

READ: Controversial pension rule law passes first amendment

Gordhan started by acknowledging the gallery which was packed with Congress of South African Trade Unions (Cosatu) shop stewards and officials, who were in attendance to “show their unhappiness with the proposed legislation”.

Cosatu has threatened pull their support of the ANC ahead of the local government elections this year, if their demands on the Bill were not met.

It is the second year in a row where President Jacob Zuma’s government has been forced to backpedal on provisions in the Tax Amendment Act that compel South Africans to put two-thirds of their provident fund savings in a retirement annuity.

Treasury has proposed that implementation of certain provisions in the new tax laws be postponed for two years, from March 1 2016 to March 1 2018.

Gordhan said the discussions should take place within the context of the broader social security reform paper, which was three months from finalisation.

“We need to begin the process of launching a campaign to inform workers about the need for savings, how savings can benefit them, and how they can balance the requirement for savings and the requirement for expenditure either at a day-to-day level or unusual events,” he added.

The tax provision would mean that retirees would be allowed to take only one-third in cash and use two-thirds to buy a pension income, while they are currently entitled to the full amount.

Gordhan said that through the consultation process his department was seeking “very concrete” feedback from workers on their needs to inform the design of the Bill.

In February Gordhan said they wanted to use the two-year period to clarify confusion and address concerns and try to come up with a better design on aspects such as annuitisation.

cosatu  |  pravin gordhan  |  tax  |  sa economy  |  retirement
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