The Public Servants Association (PSA) has called for full tax exemption on retirement-pot withdrawals made under conditions of proven financial hardship.
The union made this call after National Treasury announced its intention to explore allowing workers in severe financial distress to access funds from the retirement component of the two‑pot system. The union said this followed Treasury’s indication that discussions would begin later this year on possible conditional access for persons who had exhausted their savings pot and had no income or UIF support.
“The PSA recognises the increasing financial pressure faced by workers amid rising living costs, debt and job insecurity.”
It said Treasury confirmed that between September 2024 and February 2026, R79.3bn was withdrawn from the savings component alone, generating R21.4bn in tax liabilities for financially distressed members, an alarming burden on those already struggling.
While the union appreciated Treasury’s acknowledgement that workers who have no alternative income should be able to “get by” through limited access to the retirement pot under strict conditions, it said any such access must not come with punitive tax obligations.
“Taxing emergency withdrawals effectively penalises the poorest workers at their most vulnerable moment. Many have applied for relief because they are choosing between survival and long‑term retirement security.”
The PSA also noted concerns raised by the retirement industry, which fears erosion of long‑term preservation.
“While preservation is important, it cannot outweigh the immediate hardships faced by workers who have no income and no access to credit.”
The PSA said it believes that responsible, conditional access, paired with tax exemption, can strike a fair balance between short‑term survival and long‑term financial stability.
“Treasury must ensure transparent and timely consultation process with labour unions, retirement funds and worker representatives.”
It said distressed workers must be protected against high administrative fees that could diminish relief.
“The PSA is committed to supporting reforms that offer real and immediate relief to workers, but stresses that such relief must not worsen their future financial vulnerability through avoidable taxation.”
TimesLIVE
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