South Africa’s workers and savers, and the financial services sector that manages their hard-earned money, will be the primary victims of the proposed National Social Security Fund (NSSF) – but, in the end, everyone will suffer, ‘as crippling taxes and shaky property rights’ will undermine the economy, the Institute of Race Relations (IRR) warns.
Rejecting the Department of Social Development’s green paper, which proposes ‘comprehensive social security and retirement reform’, the IRR warned that it ‘represents a further State Capture v2.0 initiative to divert private savings and assets to the state. In this, it resembles other proposals such as prescribed assets, the National Health Insurance, and expropriation without compensation. All of these measures are aimed at shoring up the dire finances of the ANC and the state.’
The IRR noted: ‘According to the green paper, a new National Social Security Fund (NSSF) is to be established into which employers and employees will have to pay up to 12% of their earnings, with a ceiling of R276 000 per year or R2 760 per month. This payment will be mandatory, effectively a tax. South African workers will not be able to opt out of paying into this state-run fund.
‘While high earners will be expected to top up their state pensions by paying into a private-sector pension fund, over and above the 12% they already pay into the NSSF, all those who are not high earners will be tied to the state fund. They will not have the choice of paying into a private pension as well because they will not be able to afford it. This will nationalise the base of the pensions industry, which currently manages an estimated R6.3 trillion worth of South Africans’ savings.’
The ‘#JobTax proposals … will hit South African workers hard, as they will keep even less of their earnings every month, while also receiving lower returns on their savings, as the South African government and its parastatals are notorious for their poor financial management. If the government can control what you put into the fund, it can control what you get out of the fund.’
The IRR said the ‘main beneficiary’ of the proposal would be the ANC.
‘Taken together, the State Capture v2.0 initiatives will feed the ANC patronage networks by allowing corrupt politicians to tap into large pools of private savings, while providing opportunities to create jobs for pals and family members in the enormous new bureaucracies that will have to be established for nationalising private pensions into the NSSF.’
Ultimately, all South Africans would suffer the consequences.
The IRR has launched a ‘pressure campaign on vested parties to stand firm against the attempted pension gouge’, and has urged South Africans to support efforts to resist #JobTax here.
[Image: Frantisek Krejci from Pixabay]