The African Transformation Movement (ATM) has called on the government to reconsider the R30 000 withdrawal cap on the two-pot system, which took effect on September 1.
ATM leader Vuyo Zungula said workers should be allowed to withdraw a substantial amount that will allow them to pay off significant debt.
This comes as some trade unions, such as Cosatu and others, have embraced the reform, praising its potential to provide workers with flexibility to access their funds while some unions, including the Police and Prisons Civil Rights Union (Popcru), have rejected parts of the system.
The South African Federation of Trade Unions (Saftu) also raised its concerns that the system might undermine long-term savings and potentially weaken workers’ financial security.
Zungula said the ATM wants the current format of the two-pot system to be re-evaluated as it puts workers at a disadvantage.
“The African Transformation Movement (ATM) urgently calls for the re-evaluation of the current limit on pension withdrawals, which is capped at R30 000. The implementation of the government’s two-pot retirement system, set to take effect on September 1, 2024, poses significant risks to workers already struggling under the weight of debt. The current limit is insufficient to alleviate their financial burdens and could instead exacerbate their dire situations,” he said.
Zungula said the R30 000 cap is not enough to help workers alleviate their financial burdens, instead workers will become worse off than they are.
“As articulated in our previous statements, the intention behind the two-pot system was to provide workers with access to their funds during emergencies. However, the reality is that withdrawing even a portion of their pension savings will push many into a deeper debt spiral, primarily due to the hidden taxes and administrative fees associated with such withdrawals.
“Workers may find themselves facing substantial tax liabilities not only from the withdrawal itself but also from potential increases in their taxable income brackets.”
On the issue of taxation, Zungula said this will also disadvantage workers who are struggling to put food on the table due to high costs of living.
“The promise of accessing retirement savings has been overshadowed by the harsh realities of taxation and fees, effectively trapping workers in a situation where they are worse off than before.
“The ATM firmly believes that the R30 000 cap is inadequate for addressing the overwhelming indebtedness that many workers face. This limit fails to provide meaningful relief and instead serves to perpetuate a cycle of poverty and financial instability,” Zungula said.
The party has called on Parliament to revise the withdrawal limit as a matter of urgency to deal with concerns from workers as well as unions.
“We recognise the need for immediate action to prevent further impoverishment of our workforce. Therefore, we urge Parliament to revise the maximum withdrawal cap and consider allowing workers to access one-third of their pension savings without the restrictions currently in place. This change is essential to empower workers, enable them to regain control over their finances, and provide them with a pathway to financial recovery.
“We call on the government to recognise the urgency of this matter and to take action that genuinely supports the financial health of our nation’s workforce,” Zungula said.
The Star