New Pension Law in South Africa Delayed Due to Union Strikes
Feb 19, 2016 06:42 AM EST
A controversial tax law that will prevent workers from getting their pension when they retire, has been delayed on Thursday by South Africa's cabinet after the country's union federation threatened to do a strike.
A threat by South Africa's biggest union federation has delayed the implementation of a tax law, according to minister in the presidency Jeff Radebe. The law, which was meant to prevent retiring employees from using their pension money once they leave employment, has now been tagged to take effect on March 1, 2018 instead of March 1 this year.
It has been reported that South Africa's economy has already been struggling due to the slow progress from the commodities section, and the new tax law is aimed to help solve that concern. Aside from the economic slowdown, the nation is anticipating a major drought, with stocks almost being placed to "junk" labeling.
The Congress of South African Trade Unions (Cosatu), has expressed their support over the threat of protest by the African National Congress (ANC) party, and the Associalted of Mineworkers and Construction Union in case the new law will take effect.
"It is apparent that despite the extensive consultation processes which were embarked upon before the law was passed, that rose concerns still exist and that those concerns have to be addressed urgently," said Radebe, in a report by Yahoo.
The National Treasury supports the new law that states fund members will only be given one third of their pension money in a lump sum upon retirement. Currently, retired employees can withdraw their entire pension savings.
Upon taking effect, the new law will allow pensioners to purchase the rest of their money in annuities.
Cosatu did say that the protest will still push through since the law should not exist at all.
"[It gives the government the right to dictate to workers how and when they should access and spend their deferred salaries in the form of pensions," said Cosatu, in a report by The Daily Mail.