LETTER: Two-pot system is not beneficial to workers
Well-known author and resident argues the two-pot system is not beneficial at all to workers.
• Thabile Mange writes:
On September 1, the government introduced a two-pot system. The government has taken more than 10 years to implement this system. The objective is to allow employees access and withdraw (R30 000 maximum) from their pension funds.
According to Cosatu, the two-pot system is their brainchild. The biggest union federation in Africa says the system will prevent workers from resigning from their jobs to access their pension funds. Workers can only withdraw money once in a financial year.
On the other hand, the police union, Popcru, is vehemently opposed to the two-pot system. Popcru, a Cosatu affiliate, said the system won’t benefit its members. A few days before September 1, the police union urged the government not to implement the system. However, its plea fell on deaf ears, and now it is quiet.
Financial experts are discouraging workers from deepening their hands into their pension funds. Their advice is that workers should only withdraw money if they need it. Their concern is that workers might deplete their savings. When they retire, they might be left with nothing in their savings pot.
When the two-post system opened, pension administrators were inundated with requests from workers to withdraw from their savings. Some have already received their money. Interestingly, SARS is benefiting handsomely from the withdrawals.
I know about 10 people who have applied and received money from their pension savings. Half of them have no plans for that money. That means they are going to blow it, if not already. They say they want to eat their money while they are still alive.
The pertinent question is: How is the two-pot system beneficial to the workers? It’s not beneficial at all. Some, if not most, workers are going to retire with a few hundred in their savings pot. The government should reconsider this system before it’s too late.
In the past, the system allowed workers to withdraw from their pension funds. However, they paid back the money they had withdrawn without interest. This was a good and ideal system. The government should revert to it.
