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While the Police and Prisons Civil Rights Union (POPCRU) notes that the Revenues Laws Amendment Bill of 2022 was signed into law to become Revenues Laws Amendment Act No 12 of 2024, our view is that the 10% seed capital which will establish the savings pot must be tax free and must not be capped at R30 000. 

Workers in both the public and private sectors have for some time been calling for access to a portion of their pensions before retirement, mainly based on their indebtedness due to financial need and distress, and consequently, early retirement as a mechanism to cash on their pension lump sum for relief. 

This was the case in the public service, where workers across sectors would resign only to start looking for employment within a year after having cashed in on their pensions. So, amongst others, access to a portion of pensions was to relieve themselves of financial distress without having to resign.

Our initial submission was based on the outcry by our members that they need to access their pension fund to assist with paying off housing bonds, and to access their pension fund to assist with building houses and to settle other forms of debts which in our view would have brought some relief to our members, and it is our view that these proposals were not incorporated in the final product of the two- port system.

The Two-Pot system was designed with workers in mind; to bring relief to the millions of workers who are drowning in debt and make sure they do not retire in poverty. The Two-Pot system was first proposed by COSATU in 2020, in the throes of COVID-19, after workers were left high and dry when the payments, they were expecting from the Temporary Employee Relief Scheme (TERS) did not materialise.

However, the Two-Pot system in its current version is not the reform that workers called for. 

Government, influenced by the business sector, has hijacked the noble demand of workers and appropriated it not for the benefit of the very workers. In the current pension system, capitalists use the pensions of workers through pension funds for investments. However, when a worker resigns or leaves their work due to any cause, they can access their pensions in a lump sum. The rules applicable to the second pot in the new reform which will kick in at the beginning of September 2024 will lock this money away from workers whilst availing it to capitalists to embark on investment adventures, which, like the investment in Steinhoff, could lead to losses of workers money and its value.

In its current form, it will not give relief members from debts but will result in members retiring without adequate savings. Comrades are cautioned to consider carefully before making any withdrawals from the savings pot. Members will be charged administration fee which will be deducted from any amount withdrawn from the savings pot and will pay tax on the savings pot withdrawal benefit based on individual marginal tax rate as supplied by SARS. This means for instance if a member’s notch is R150 000 and withdraw R30 000 from the savings pot within the first year (from 1 September 2024) the member will be taxed on a tax bracket of R180 000, this in our view will increase the tax burden on members instead of alleviating the current challenges faced by members.

As POPCRU we discourage members from accessing the savings pot withdrawal as members will be worse off, this process of the Two-Pot system is not designed to assist public servants, in our view it will disadvantage members.

We demand a revised Two-Pot System that allows workers to access a portion of their pensions before retirement but does not lock away the other portion until retirement, and for this, we will be engaging our sister unions through the upcoming COSATU Central Executive Committee (CEC) meeting on the 26th of August to consider the following;

• The delay on the implementation of the two-pot system, pending further proposals all stakeholders
• Allow all members to access the actual 10% of their pension fund.
• Allow members to access their pension fund savings tax free.
• The 10% seed capital must not be capped at R30 000 (it must be the actual 10% of the member's pension fund.
• Allow members to receive all of their pension fund contributions upon resignation.

Issued by POPCRU President Thulani Ngwenya