EFF calls for action against those defaulting on pension contribution

The Economic Freedom Fighters (EFF) has called for action against companies and municipalities that are defaulting on pension fund contributions for workers.

The party says private security companies are in arrears of R6 billion while municipalities are in arrears of a billion rand.

That’s as the country began implementing pension reforms commonly known as the Two-Pot system, from which workers can cash out a portion of their pensions.

The two-pot system came into effect at the beginning of this month. It allows workers to cash out a maximum of 10% of their retirement savings annually, up to a maximum of R30 000.

The EFF says not enough public education was done about the tax implications of the pension withdrawals.

“There was not enough public education on the tax implications of the two-pot system. So, workers think they will get a maximum of R30 000 whereas they will be taxed and they will receive about R19 000 if we use the calculator that SARS has put up on its website. And of course, insurance companies as well are making major profits from these withdrawals. So it seems to not have the intended effect that it’s supposed to have so that is the concern we raised in the standing committee on finance,” says EFF MP Sinawo Thambo.

EFF calls for action against companies and municipalities defrauding pension for workers

‘Defaulting companies’

The party says SARS and insurance companies are set to benefit the most from the two-pot system. The EFF wants investigations into companies defaulting on pension fund contributions.

“We have written to the Speaker of the National Assembly saying that there must be an Ad Hoc Committee to investigate pension fund theft that amounts to about R7 billion by private security companies and local government municipalities which is the most concerning part for us as well. But do you have evidence to support that claim?” Thambo adds.

Thambo says workers must also be taught about the impact on their future savings.

“Most definitely, so our EFF Labour desk has received complaints from more than 246 companies, private security companies that have not been helping workers. We have more than 4 000 names of people who come to us and complain.”

EFF says two consecutive reports released in September 2023 and this year in March 2024 outlined that more than 170 municipalities are in arrears on their pension funds to the tune of R1 billion, “more than 2 200 private security companies are in arrears to the tune of R6 billion,” Thambo says.