Pension showdown looms as public servants are excluded from their funds
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ANOTHER showdown between the government and public sector unions is looming over the exclusion of public servants from early access to a portion of their retirement funds.
The government announced yesterday that it would allow financially-struggling workers to dip into their pension funds from next year in a bid to mitigate against the impact of the Covid-19 pandemic on household incomes.
However, public servants whose savings are under the Government Employees Pension Fund (GEPF) will be excluded from the withdrawal process.
The National Treasury yesterday gave more details about the approach and planned timelines concerning the proposal to allow for pre-retirement withdrawals from the retirement funds.
Treasury said any consideration for early access would require legislative and fund-rule amendments as the current law and policy prohibits any pre-retirement access to retirement savings, unless an employee resigns or is retrenched.
“It is expected that the earliest that any changes would become effective for a new withdrawal mechanism is 2022,” it said.
“However, the withdrawal process will not cover the GEPF, as it is not regulated under the Pension Funds Act, and hence no Covid-related withdrawals will be allowed.”
The GEPF is the largest pension fund under the government-controlled asset management company, the Public Investment Corporation.
Earlier this month, former finance minister Tito Mboweni said financially-struggling workers should be allowed to have access to a percentage of their retirement funds in these times of difficulty.
Mboweni said the matter had been discussed at Nedlac ad nauseum and the National Treasury and other relevant officials should speed up this matter. The funds, he said, could among other things be used to settle bond repayments or “sort out whatever debt positions they might be in”.
The Treasury said that even before the advent of Covid-19, the government had recognised that many members may need to access part of their savings in particular unexpected circumstances.
It said the government had been engaging with trade unions, retirement funds, regulators and other stakeholders to discuss how to increase savings and improve preservation and allow limited withdrawals, without creating liquidity and investment risks.
However, the country’s largest labour federation, Cosatu, yesterday vowed that it would push back against the snubbing of public servants in the process.
Cosatu spokesperson Sizwe Pamla said they were not surprised by the Treasury’s move as it was part of an ongoing “provocation of workers” which began with the unilateral wage freeze. Pamla said a decision like this was “scape-goating workers” for all the wrongdoings and corruption within the government.
“Our position is that this is unacceptable and outrageous. We are not going to listen to them,” Pamla said.