The South African labour market and pension system are in for a lightning-fast change. Since the government has opened consultations for raising the national retirement age beyond the so far fixed 65 under one of the least positioned acts of changes in policy in decades, this proposed amendment will now align retirement with lifespan, take pressure off the pensions system, and ensure sustainability of social grants in the country. A series of frequently asked questions have been compiled about the new retirement age bill affecting workers and what it means for future retirees.
Why Is the Retirement Age Changing?
For years, South Africans felt that the usual retirement age was 65. However, Departement studies of Employment and Labour have shown that life expectancy has increased, with individuals remaining productive for a few more years well into the later life. Therefore, the proposed change in retirement age is but one facet of an overall drive to modernize labour and pension legislation aimed at keeping the Government Employees Pension Fund (GEPF) and the old-age grant system economically viable.
Proposed Retirement Age
The government intends to steadily raise the set retirement age this decade from age 65 to age 67; thus, this will go under the 2025 Retirement Policy Reform.
- Phase 1 will be from 2026, with 66.0 being the set retirement age.
- Phase 2 will be from 2028 when the full retirement age will be set at 67.
That means practically a sort of old guy of 65 will have to survive the year 2025 for one or two more years before he can enjoy full pension rights depending on how he hangs upon himself and the fund construction.
Effect on Employees and Employers
A host of benefits and difficulties shall thus pile with the working class:
- The argument for it was that the whole scheme should give workers longer to save for their retirement and in turn increase pension benefits.
- On the downside, it will become harder to retire somebody forcibly, be it through illness or job loss, especially in the industrial kind of jobs.
From the employers’ side on the downside: they will be required to plan workforce changes, negotiate contract revision terms, and deal with some of the more far-reaching downsides.Were quite varied in their reactions;
Impact on SASSA Old Age Grants
This increase in retirement age may affect eligibility for the SASSA Old Age Grant that is presently available for people aged 60 and above. However, nothing official has been announced yet, but experts feel that this new pension aspect would force the government to increase the qualifying age to 62 or even 63 years. In this way, the adjustment would have helped SASSA by easing its financial burden, allowing the agency to divert money toward supporting the unemployed and disabled.”
Preparing for the Change
Financial advisors recommend South Africans to review their retirement plans early so they can adjust according to the policy. Regular contributions to retirement annuities or pension funds and staying debt-free for as long as possible will thus be essential to both parties’ assurances of a long life. The government has also made it clear that it would embark upon a public awareness campaign to ensure that all citizens would understand the changes and thus prepare for a longer working life.