Two-pot retirement system: South Africans, unions unhappy about Sars’ tax deductions

South Africans are not fond of the taxman and now that they realise how much of their pension fund withdrawals under the two-pot retirement system will go to the South African Revenue Service (SARS), people and unions are not happy with how much tax they will pay and that they even have to pay tax at all.

The Congress of South African Trade Unions (Cosatu) said in a statement last week that it has now proposed to the National Treasury reduce the tax burden on low- and middle-income workers, in particular when they access the savings component of the two-pot retirement system.

“Cosatu is deeply concerned that Sars is moving to deduct any tax arrears owed by workers from their pension funds. Workers are drowning in debt and should not be frustrated or disappointed by Sars raiding their long-sought relief to address the state’s fiscal pressures. “

Therefore, Cosatu wants an urgent meeting with Treasury and Sars on a more sensitive and sympathetic approach for Sars to engage workers on the tax they may owe, its verification and a more humane payment plan that considers workers’ individual financial pressures as provided for under law.

Zwelinzima Vavi, general-secretary of the South African Federation of Trade Unions (Saftu) told Eyewitness News that the two-pot retirement system is a “scam” and is effectively a way for government to increase taxes.

He said it is a raw deal for workers and added if the two-pot retirement system was really intended to offer relief to South Africans, the funds would not be subject to taxation.

“When you look at the details of how this is going to be operational, you then realise that this hullabaloo means absolutely zilch; there will be no relief.”

ALSO READ: Two-pot retirement system: SA workers are the losers with tax

The Citizen readers on withdrawal tax

According to comments on The Citizen’s Facebook page, our readers are also not happy with paying taxes when they withdraw funds from their savings pots under the two-pot retirement system either.

This is what some of them had to say:

“This is tax revenue for the government at the loss of workers. The money that will be withdrawn will hardly pay any debt, so civilians must not be excited to draw their pension, rather just leave it as it is.”

“The sad part is that all these taxes collected from these withdrawals will go into certain pockets and not benefit the country as a whole.”

“Tax upon tax – like 3 times.”

“Double taxation. We were taxed on our salary, soon to be taxed again on our pension. Obviously, there will be a loophole to eat our cash. Government needs cash to bail out their falling apart entities.”

“It was an obvious case everyone knew about. Ramaphosa did this for Sars to have a bite on people’s money as usual and have a bite once more when they retire.”

ALSO READ: Two-pot retirement system: You must be registered for tax to withdraw – Sars

“Clearly people do not trust government with their money.”

“They are clearly disillusioned and do not trust government’s motives”

“This two pots system is just a revenue enhancement project by government and Sars. Daylight robbery this one.”

“Just another way to screw the people over again to line their own pockets.”

“Sars is the biggest beneficiary in this scheme.”

“I thought GNU will bring good things, but the ANC still steals workers’ money via Sars.”

“Daylight robbery of the workers. The members of parliament who agreed with this don’t have the workers’ best interests at heart.”

“In Ramaphosa’s economy, we are so poor, we have to withdraw our pensions. Zuma must fall participants must be rejoicing. Your wishes have become reality.”

“Another government bailout plan to feed their inability to provide cash flow, hence boosting their coffers with these scams aimed at unsuspecting citizen’s hard-earned benefits.”

“Now the crooks will have two pots to dip into.”

“Appears to be another way for this country’s comrades to expand their waistlines!”

“In other countries, they use taxpayers’ money to provide services. In South Africa, it is simply a donation to our great and glorious comrade leaders.”

ALSO READ: Two-pot retirement system: Do you know enough?

‘Paying tax is like a government heist’

Some readers even feel robbed:

“If you scrutinize this system, the more it looks like a government heist.”

“I thought that this scheme was to place more money in the hands of government. Officially confirmed.”

“I feel like this is daylight robbery from government and most people do not even realise it.”

“This is a great heist by the government.”

“Our great and glorious comrade leaders will take money from pensioners to buy Bentleys and Blue Label. Disgusting people.”

“We get cheated and taxed to death either way, whether you leave it or take it, you will be screwed over either way.”

“Mr Bills Ramaphosa has caught us by the throats this time. I’m becoming depressed already.”

“The fact that you have to pay tax on that withdrawal is what’s bothering me. Is this a way for the government to collect taxes from people who are “in need of the money to pay their debt” as they put it?”

ALSO READ: Two-pot retirement system: before you withdraw, ask yourself

Some people say they will withdraw in any way

Some of our readers said they will withdraw as much as they can regardless of the tax they have to pay:

“Thanks for giving us information that pretty much confirms that withdrawal is the right decision. Woza December!”

“It doesn’t matter I’m going to withdraw my share and Sars can take its share.”

“I already made plans for when the money knocks on my account. The rest, sitobuye sikubone.”

“I don’t care. All I want is my moola to chow it while m still alive.”

“I don’t care about tax. I am used to be taxed like a slave. But I am going to withdraw my money no matter what.”

ALSO READ: Two-pot retirement system: The long-term value of not withdrawing

A few readers give sound advice

However, there were a few readers who had more solid advice to rather not touch your retirement savings:

“I paid into my retirement fund for 30 years and today I am earning 1/3 of my last salary and struggling to survive (no debt). You touch your pension funds at your peril. Dumbest decision ever to allow this – jullle gaan almal baie spyt wees (you will still be very sorry).”

“Sars gets its taxes much sooner and those withdrawing their pensions have less to retire on.”

And then there were readers who seem to simply accept the system:

“Withdrawals have always been taxed, perhaps not this much, but it’s nothing new.”

“Who cares? Will tax not be there after 30 years when I retire? Will I still be alive? Will our funds still be safe?”

“Best to leave the money alone for now. Otherwise, they will tax you twice as much.”