Revenue Laws Amendment Bill: public hearings & National Treasury response

Video The Select Committee on Finance of the National Council of Provinces met virtually to hear an oral submission from COSATU, with written submissions also received from the Association for Savings and Investment South Africa (ASISA), Law Society of South Africa, and the Institute of Retirement Funds Africa (IRFA). National Treasury and the South African Revenue Service (SARS) were present to respond to issues raised and to guide the Committee through the Bill clause by clause. The discussions were centred on the Implementation of the two-pot retirement system, taxation of withdrawals, and measures to balance immediate relief for workers with the long-term sustainability of retirement savings. COSATU strongly emphasised the plight of unemployed workers, arguing that the legislation must provide mechanisms to allow access to retirement savings in times of crisis, while safeguarding the overall structure of the system. It proposed that workers first exhaust available savings and unemployment insurance before being permitted to access preservation funds, and suggested mechanisms to prevent abuse once employment resumes. COSATU stressed the need to address household debt, noting that many workers are forced into resignation to access funds, and advocated for structured parameters that would provide limited relief while minimising the depletion of retirement assets. A major point of contention was the taxation of withdrawals. COSATU argued that the current structure disproportionately affects low-income workers, especially those below the tax threshold or close to the next bracket, who are pushed into higher tax bands through the withdrawal. It urged Treasury to avoid bracket creep and ensure fairness for vulnerable workers. Education-related withdrawals were also highlighted, with COSATU suggesting that the current pension law provisions for home loans could serve as a model to support educational expenses. It linked this to broader concerns about the accessibility and sustainability of NSFAS, pointing to erosion of the income thresholds, inadequate adjustments for inflation, and the growing burden of student debt. National Treasury’s response noted the principle that pensions represented deferred wages and must eventually be taxed. The progressive system ensured fairness, with low earners either exempt or subject to minimal taxation, while those earning more paid proportionately. Treasury affirmed its openness to engagement on certain refinements but insisted that fiscal prudence and retirement preservation remained central to policy. Treasury presented a detailed clause-by-clause explanation of the Bill, clarifying technical corrections, alignments with previous amendments, and provisions concerning vested and savings components, transfers, and treatment of members over the age of 55. SARS endorsed Treasury’s responses. Overall, the meeting underlined the tension between ensuring immediate relief for struggling workers and protecting the integrity of South Africa’s retirement system. Members recognised the urgency of addressing unemployment, household debt, and educational burdens, while also weighing the fiscal and sustainability concerns raised by Treasury. The inputs received would inform the Committee’s scrutiny of the Revenue Laws Amendment Bill.