President Jacob Zuma celebrates May Day with South African Communist Party general secretary Blade Nzimande and Cosatu president Sidumo Dlamini at Sisa Dukashe Stadium, Mdantsane. Picture: THE HERALD
President Jacob Zuma celebrates May Day with South African Communist Party general secretary Blade Nzimande and Cosatu president Sidumo Dlamini at Sisa Dukashe Stadium, Mdantsane. Picture: THE HERALD

IT IS unfortunate that much of the commentary on organised labour’s reaction to the government’s recent retirement reforms focuses on employees wanting unfettered access to their retirement savings — even if they would need to resign from their jobs in order to do so.

This simplifies — and polarises — an issue that has been present in the national discourse on retirement funding and social security for about 30 years.

It is equally unfortunate that, to mobilise lay people around this complex issue, the most obvious rallying points are the red herrings of "nationalised pensions" and alleged total lockdowns on withdrawal benefits before retirement.

It seems to be relatively common knowledge that the new rule that came into effect when President Jacob Zuma signed the Taxation Laws Amendment Act last month, is that from March 1, provident fund members who are not yet 55 will be entitled to withdraw only one-third of the amount they have saved since that date as a lump sum, and will have to acquire an annuity with the balance.

They can withdraw the full amount of retirement contributions they made before March 1 — no matter how big that amount may be, whether at retirement or earlier — on resignation or dismissal.

There are several other provisions in the reforming law, but they do not include a prohibition on members receiving the full value of their withdrawal benefits when they resign or are dismissed.

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FROM the mid-1980s, when the Congress of South African Trade Unions (Cosatu) was formed, until the early years of the 21st century, the trade union federation exerted significant influence in the reform of the retirement industry.

Cosatu achieved gains, such as employees’ right to elect members to the boards of pension funds (and minimum percentages in that respect) and the establishment of union funds.

After a decade of democracy, the government had become the custodian of the retirement reform project and, although more gains were made, they may have been more muted than expected.

Perhaps that is why murmurs regarding prescribed (socially desirable or state-friendly) investments by pension funds have lingered for the past decade or so, even though regulation 28 of the Pension Funds Act is regarded as an international standard of legislated sustainable investment prescriptions.

An official national social security fund was first proposed publicly by the Thabo Mbeki administration in 2007, but public discussion documents were slow to follow.

Labour’s stance broadly was that a national social security system should provide a comprehensive "social floor" that would include minimum wages, universal health coverage and a default state pension not dependent on means by the time compulsory preservation and compulsory annuities were legislated.

Otherwise the lack of access to retirement savings is not fair, especially in industries in which the prospect of disablement, retrenchment or death before retirement is vastly more probable than reaching the age of 60 or 65.

And it is worse still if an individual’s accrued benefits are unlikely to provide an adequate standard of living in retirement.

And so, public talk of a national social security fund went very quiet until 2013, when the first draft legislation regarding the current reforms was published.

A national social security fund will mean to each stakeholder what that stakeholder wants it to mean. But that is no excuse to reduce the debate to quick and convenient barbs and slurs.

A thorough reading of the government’s early statements suggests that the current pension reforms could simply be regarded as the first phase of what the government has always envisaged. But if the idea is to introduce a national social security system incrementally and piecemeal, then orchestrating that roll-out is very important, and this seems to be where organised labour’s concerns lie.

Add to that the sense (or allegation) that such apparently compelling arguments have been ignored, and it becomes all the more understandable that organised labour, especially Cosatu as a member of the tripartite alliance, may perceive this legislation as a slap in the face.

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YET Health Minister Aaron Motsoaledi released the white paper on National Health Insurance last month.

Minimum wages are on the table for discussion. In 2013, the finance minister announced an intention to eliminate the means test for the state old-age grant by this year, and although he recently announced the deferral of that timeline, it has not been taken off the agenda.

So, it does seem that many of the pieces that will ultimately come together to form the desired social floor are receiving regular attention from the government.

One can only hope that whatever mobilisation and campaigns lie ahead of us, the opportunity to educate lay people whose livelihoods are at stake is not overtaken by political opportunism from any stakeholder.

These issues are of importance to all South Africans, not only the government and organised labour. So it is critical that employees should not resign now for ill-informed reasons, and equally, that South Africans should not resign themselves to the discourse on retirement reform being someone else’s debate.

• Geral is a partner at Bowman Gilfillan Africa Group. He writes in his personal capacity.