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.
Source: eNCA
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