Address by the Cosatu General Secretary Zwelinzima Vavi, to IRF conference in Cape Town10 - 09 - 07 |
Address by COSATU General Secretary, Zwelinzima Vavi, to the Institute of Retirement Funds Conference, International Convention Centre, Cape Town, 10 September 2007
Labour's position on the role of retirement funds in society
Master of Ceremonies
Ladies and Gentlemen
Comrades and Friends
Thank you for inviting me to address this 2007 conference of the Institute of Retirement Funds. You have invited me to speak about the position of organised labour on the role of retirement funds in society under the theme: Rising to the Challenges of Retirement Reform: Where to from here?
That means addressing the challenges we face as South African workers in changing the way retirement funds are owned, controlled, managed and regulated in our society. It is the role of Labour to ensure that the changes we make actually address the problems workers have in our society.
We are in the middle of a retirement funds reform process right now. We have been engaged in that process for the past six years and - at the slow and fragmented pace we are going - it will take us several years more before we get there. We are likely to see the 2010 Soccer World Cup before we see the new Retirement Funds Act.
But is there any worker, or anybody in this audience, who has witnessed the behaviour of some institutions in this industry in the past year or so, who doubts that what we need is not reform, but a revolution of the entire industry?
We need a revolution in our thinking on how we want to treat workers' savings
We need a revolution in how we deal with workers' dependents and beneficiaries
We need a revolution in how workers' savings can be invested to improve their lives
The changes we need are fundamental, necessary, and urgent. I will address some of these changes we need.
Firstly, we need to ensure that the voice of workers, retirement fund members, and their elected trustees is heard. We need a trustee-driven Retirement Funds Forum through which we will liaise with stakeholders in the industry and government on the new policy path, the new draft law and its implementation.
Our slogan in rallying workers to this cause is "Nothing About Us, Without Us". All the three Labour Federations in Nedlac support this call.
We are pleased to have commitments from the National Treasury and the Financial Services Board that they will recognise the new body as the legitimate voice of trustees in decision-making forums. We thank them and other stakeholders, including Nedlac partners and the IRF itself, for being willing partners in this process to transform the IRF into two bodies - one representing trustees, the other representing service providers in the industry.
At the same time, COSATU is concerned at the opposition to this democratic transformation process by a small group within the IRF. We have noted their disruptive behaviour in the past and as workers, we are shocked that they oppose change and want to cling to the old, discredited and unrepresentative body. We question whether they represent members' interests at all.
Some of them say they want to build - build what? we ask.
It seems that a small handful of trustees are so comfortable in the pockets of service providers that they don't want any change - especially if that change might affect their own pockets! To them our message is simple: Good luck to those of you who want to cling to the past. Apartheid is dead and this transformation process is helping in some small way to bury it. Move with the times and support transformation or be exposed as the self-serving, greedy puppets that help bring this industry into disrepute.
Let me assure you, ladies and gentlemen, trustees and comrades, that we will not allow this insignificant, unrepresentative group to divert us.
We must say the IRF transformation process has not moved as quickly as we had all hoped. But we are confident we are on the last lap and as soon as we can finalise the issue of start-up funding of the Trustees' body with Treasury and the FSB, we will finalise its constitution.
We call on all partners in the transformation process to ensure that the new Trustees' Forum is launched by May next year. We cannot delay beyond that deadline for fear of seeing the process leave workers and their trustees behind. Please take this as an early invitation to a launch on May Day 2008!
On a more serious note, COSATU members believe that the process of social security and retirement reform policy and law reform - the bedrock on which the revolutionary new dispensation must be built - must be better coordinated within government - especially if government is serious about engaging widely and constructively with all stakeholders.
It does not enable us, as a federation with 1,8 million members, to engage with the law reform process if we get policy papers in bits and pieces - months and even years apart - from different departments. Government should move speedily to consolidate its departmental inputs and to produce one comprehensive, holistic policy position with which we can engage. We were promised this detailed comprehensive document in March 2007, then, by September. It is now the 10th of September and we have not heard anything.
We were hoping the Deputy Minister of Finance would have a pleasant surprise for us when he addressed this conference. But he declined the invitation. We urge the Deputy Minister to ensure that the process moves faster. Overall, better coordination from the Inter Ministerial and Inter Departmental Committees that are dealing with this policy would enable the rest of us to engage better. The Government - whether representing the Presidency, Health, Social Development, Labour or Finance ministries and other departments - must speed up its work and deliver its consolidated policy document. It is causing confusion and dissatisfaction to have these delays. We have one government; we need one position.
That is not to say that we do not welcome the new voices of the Minister and Department of Social Development in the debate. We certainly do recognise the progressive proposals on comprehensive social security and retirement funding as welcome changes from some of the otherwise conservative and overly pro-business approaches we have had up to now.
COSATU is in favour of a completely restructured and integrated social security and retirement funds policy and law reform process. We fully endorse proposals for a 50/50 Defined Benefit-Defined Contribution fund. Members and trustees need to have a thorough engagement on how this proposal would be implemented to ensure that retirement funds fulfil the purpose for which they are intended.
Part of the debate on Defined Benefits vs. defined Contribution, must include discussions on a comprehensive restructuring of the Unemployment Insurance Fund. COSATU supports an overhaul that will provide income for people who lose their jobs, and thereafter allow them to access their benefits, whether through a lump sum or in instalments.
COSATU also supports proposals for preservation of funds - but this support is for conditional preservation. The Federation cannot support blanket preservation in an environment with close to 40% unemployment and the continuing destruction of secure better paying jobs, which are being replaced by insecure, poorly paying jobs that offer no benefits.
We support the compulsory provision. We support proposals for a low entry level. Some of our affiliates want this to be for anyone earning R12 500 a year. There is no support in COSATU for proposals of a limit of R60 000. There must be no limit on the compulsion.
Our view is that everyone who earns must save. Compulsory provision must apply to all except those who earn below the minimum entry level. And we will establish the minimum through a national debate. We fully support the view that people cannot be expected to save for tomorrow when they are starving today. Nobody with an empty stomach can plan for a second life in retirement.
This brings me to the matter of a comprehensive social security and retirement reform policy providing for a basic income for all. How can people be required to save for retirement when, as a society, we do not ensure that no one sleeps on an empty stomach? Trade unions and civil society structures across the board have called on Government to provide a Basic Income Grant. Regrettably government has been opposed to this. COSATU cannot be expected to just support this compulsion without addressing the plight of the working poor and the unemployed many of who fall within the cracks of the government social security system.
All of these weighty issues require extensive engagement on a national level from fund members, trustees and the trade union movement generally. So how workers can engage with the process? As COSATU, by far the biggest of the labour federations, we simply do not have the resources - human, financial or otherwise, to engage with this far-reaching and important policy and law reform process. And as I mentioned earlier, our resource constraints are made even worse by government presenting fragmented, departmental policy inputs instead of a consolidated position.
Government departments have teams of people, all well resourced, working on this process and spend millions more on consultants to do research and advise them. In contrast, COSATU has one department, with one employee, relying on participation by equally overworked officials in our affiliates. To say this process overstretches the meagre resources of the federation and affiliate unions is an under-statement.
If Government is serious about its constitutional obligations to consultation, inclusion and finding a solution that works, it must resource the process, not just itself. It is Government's responsibility to provide resources to enable its counterparts - organisations representing members and beneficiaries of retirement funds - to engage meaningfully in the policy and law reform process. To date, this has not happened.
Workers - the very contributors to retirement funds whose savings oil the wheels of the investment machine, and whose taxes pay for Government's spending - must find their own resources to engage in the process, or be left out. This approach is both irresponsible and shortsighted.
The first thing we will spend the money on is research into the international experience of retirement reform by workers around the world. We want to learn from best practice - the best practice of organised labour in countries that have gone through a similar process.
We will be looking to the experiences of workers in the United States, who just last year resisted attempts by their government and financial institutions to privatise retirement funds. The experiences we are looking at include amongst others experiences of workers from Australia, UK, Nigeria, India, etc.
COSATU supports the establishment of a low-cost national retirement fund but will never support privatisation of its fund administration. This fund must be governed and driven by elected worker trustees and we will reject any attempts by Government to hand this over to the private sector. I really thought COSATU had said its last word on labour's total rejection of privatisation some time ago. It seems Government got the message, certainly. But some in this industry have not. I hope this issue can be debated at your conference and we can agree, once and for all, that privatisation is not for discussion now or in the future.
That brings me to the final point I wish to make today - the governance of funds. This is surely an area where we can say we need revolution, not reform. In the past year or so, we have lived through the shame of Alexander Forbes bulking scandals, Ghavalas, and Fidentia, to mention only a few. The anger from workers over their betrayal by service providers in these criminal cases is very real. The message they want to send to service providers who engage in corrupt and criminal activity is "Shame on you!" Clean up, or we will not use your services.
Shame on you trustees who were party to the corruption by signing confidentiality agreements that leads to the theft of workers' retirement funds. They must disclose what they know and repay any monies they received illegally. We call on fund members to insist that trustees who do not disclose and repay be removed.
We are waiting to hear the fate of these men when their cases come to court but why have we not yet seen arrests of Living Hands trustees? When are they going to be held accountable for their actions? Were they not equally criminally liable?
One of the shortcomings of our current dispensation was highlighted by the Fidentia/ Living Hands fiasco - the issue of registration and regulation of trusts. Our law reform process must include amendments to legislation governing trusts to prevent the kind of abuse that we saw in this case.
Our pain over the crimes against innocent beneficiaries by Fidentia is eased a little by support for the initiative to establish the Fidentia Trust Fund to restore the stolen funds. We want to use this platform today to call on National Treasury, the FSB and the private sector to give their full support to this initiative. COSATU is 100% behind this initiative and commends all those who are working together with us to get it off the ground as soon as possible. Our aim is to collect the R1, 4 billion shortfall and to pay it back to the widows and orphans from whom it was stolen. We hope it will be in place by the end of the year, a Christmas gift to the beneficiaries who have suffered so much this year.
To conclude then, Labour supports a speedier, comprehensive, consolidated policy and law reform process. We want all stakeholders to be empowered to contribute to a process that can deliver to South Africans what we deserve . a world class social security and retirement dispensation that helps achieve our national development goals of creating jobs and eradicating poverty.
Thank you.