Social Development Minister Lindiwe Zulu. Photo: News24
- Social Development Minister Lindiwe Zulu withdrew her department’s Green Paper on Comprehensive Social Security and Retirement Reform on Tuesday.
- But this isn’t the end of the plan, which the department said will be revised to give “better clarity” – with a new version released.
- The plan, which triggered widespread controversy, would have had a significant impact on the country’s investment industry.
While Social Development Minister Lindiwe Zulu withdrew her department’s Green Paper on Comprehensive Social Security and Retirement Reform on Tuesday, it won’t be the end of the controversial plan.
The Green Paper triggered outrage among taxpayers and the business sector, as it proposed that all South African earners pay up to 12% of their income into a new government-managed investment fund. The proposed new National Social Security Fund (NSSF) would have provided retirement, disability benefits and unemployment benefits to all South Africans.
The proposal would have had a devastating impact on South Africa’s investment industry, as retirement investments and other savings would have been channelled to the NSSF instead.
The decision to withdraw the green paper was met with relief in industry circles.
But in a statement on Wednesday, the Department of Social Development said that the Green Paper will be revised to “provide better clarity on some of the matters”.
“Some of the technical aspects of the proposals were not well understood and many have misrepresented the proposals, particularly on the National Social Security Fund. It has become apparent that some of these areas need further clarification to avoid any further confusion.”
The department added that it was “pleased by the level of public discourse” on the paper, and that a new version will be released “as soon as these issues have been addressed”.
The Green Paper was gazetted without approval from Cabinet, and Treasury told Fin24 that it wasn’t official government policy.
Treasury pointed out that the Green Paper was a “very soft proposal”, reflecting the aspirations of some stakeholders who were consulted over almost two decades.
But the National Economic Development and Labour Council (Nedlac) task team, which looked at the proposals over the years, said that the Green Paper largely ignored the business sector’s inputs. They objected to the defined benefit nature of the fund, and also warned that contributions would have to be hiked (to above 12%) to maintain payouts.
The Green Paper was first gazetted in mid-August.
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Publish date : 2021-09-01 11:09:52