Cosatu Statement on Pension reform 10 - 03 - 06

 

Media statement - Pension reform

The Congress of South African Trade Unions has noted that the national Treasury is proposing to "gradually phase out lump sum pension payments in a bid to foster retirement savings".

COSATU is concerned that this proposal has been made public before a long-awaited discussion paper on the future of retirement funds has been submitted to Nedlac, as the government promised it would. We are even more concerned that the Treasury say they will present their proposals to the life industry within the next two months. There is no possible justification for this business sector being consulted before, and separately from, the constituencies represented in Nedlac.

COSATU would much prefer to discuss the overall reform of retirement funds than to engage in debate on piecemeal changes, like the one now being put forward by the Treasury. We therefore demand that the government release the discussion paper forthwith, so that it can be discussed in Nedlac and then and then thoroughly debated in road-shows in every province.

While COSATU shares the government's concern that some workers may misuse their entire pension payout by spending it in one go on a car or a house, there is also a problem with the government dictating that in all cases it must be paid out only as income. COSATU will argue for workers have the option to use a proportion of the pension as a lump sum, with the rest paid as a monthly income.