The Pension Fund Amendment Bill, introduced by Finance Minister Enoch Godongwana in January, provides for a “two-pots” system that divides pension contributions into two separate pots: a savings pot and a retirement pot, with effect from September.
Pension fund members are set to access a third of their pensions within the next four months.
The National Assembly unanimously approved the Pension Fund Amendment Bill after it was sent back for concurrence by the National Council of Provinces (NCOP) with technical amendments.
The bill, introduced by Finance Minister Enoch Godongwana in January, provides for a “two-pots” system that divides pension contributions into two separate pots: a savings pot and a retirement pot, with effect from September.
It proposes that retirement fund members be allowed to allocate one-third of their contributions from the date of implementation of the new legislation to an accessible portion of those members’ retirement savings.
Workers will access 10%, up to R30 000 of their existing savings when the law comes into effect and from then on once a year, access to a third of future savings.
ANC MP and finance standing committee member Noxolo Abraham said they considered the technical amendment made by the NCOP.
“The proposed technical amendments aim to refine the language, clarify definitions, and ensure consistency across provisions within the bill.
“Each proposed change addresses specific sections and provisions to enhance the overall effectiveness and coherence of the legislative text,” Abraham said.
DA MP Wendy Alexander said the amendments will have a far reaching impact on the financial system, from investment practices, risk management, retirement planning and overall economic stability.
“These reforms represent a progressive compromise that strikes a fair balance between the needs of hard working individuals and the need for sound financial systems,” Alexander said.
“Individuals will have access to the savings portion of their pension funds while they continue to plan for their retirement,” she added.
EFF MP Mzwanele Manyi said his party viewed the proposed amendments as a crucial opportunity to reshape the pension landscape in accordance with core principles.
“The withdrawal of savings benefits should be such that it prioritises the interest of workers and ensures their economic security,” Manyi said.
He said stringent regulations for deductions were essential to safeguard the value of pension funds against exorbitant fees and charges.
“The EFF advocates for imposition of caps on such fees to ensure a large share of contributions directly benefit members rather than lining up pockets of financial institutions pursuing profits at workers’ expense,” he said.
IFP MP Mzamo Buthelezi said the bill showed how the government needed to do more to safeguard the well being of the people.
Buthelezi said although the bill seemed to have noble intentions, in the long run it might yield disastrous outcomes.
Al Jama-ah leader Ganief Hendricks said the amendments would harm people when they reach the age of 60 if they have withdrawn from their pension funds.
“This is going to cause so much hardships,” Hendricks said, adding that there should be a provision that pension fund members should pay back the money without interest.
Meanwhile, Cosatu welcomed the passage of the bill that will be sent to President Cyril Ramaphosa for assent.
“We are pleased that while we may not have achieved everything we proposed, that not only have we reached consensus on the key matters, but legislation providing for the reforms has been adopted by Parliament and there is agreement between government, Parliament, Cosatu and the pension funds for implementation on 1 September 2024,” acting national spokesperson Matthew Parks said.
He said the workers were highly indebted due to slow economic growth, the rising costs of living and having to support relatives in an economy battling a high unemployment rate.
Cape Times