Zuma calls out Cosatu over its challenge on retirement reform

President Jacob Zuma on Wednesday effectively told the Congress of South African Trade Unions (Cosatu) that the new retirement tax amendments are going to be implemented despite their opposition and that the earliest review will be in two years time.

The labour federation said last week it had started with the process of declaring a full-blown strike in an attempt to force the government to repeal the changes signed into law by the president.

The federation’s general secretary Bheki Ntshalintshali claimed there had not been a proper consultation process over this issue at the National Economic Development and Labour Council (Nedlac). “We only discovered during those informal discussions that they had sneakily smuggled preservation in this draft bill and that is when we made it clear that we were going to oppose this with our all might‚” he said.

The Presidency on Wednesday issued a statement saying there was an extensive consultation process over the Tax Administration Laws Amendment Act‚ spanning over two years.

Fifteen meetings took place with Nedlac constituencies from June 2012. The Bill was first presented in Parliament in 2013. There were 25 other meetings with labour unions in the period up to 2015‚ the presidency said.

“When tax legislation is presented to Parliament‚ a comment period is called for (normally 30 days) and public hearings are held before the Standing Committee of Finance (SCOF). From SCOF‚ the Bill goes to the Select Committee on Finance of the National Council of Provinces which also holds hearings. This means that parliamentary hearings were held both in 2013 and 2015. “It should also be noted that Parliament has required that a review of the taxation law be conducted after two years to assess its impact. In this regard the law will be reviewed after two years.”

The new tax rules mean that workers can take one-third of their pension savings as cash‚ but the rest must be invested in an annuity‚ as opposed to taking all of it out and run the risk of not having retirement savings.