On Tuesday, Minister of Social Development Lindiwe Zulu withdrew her department's Green Paper on Comprehensive Social Security and Retirement Reform, which was gazetted two weeks ago.
The withdrawal was gazetted late on Tuesday.
No reason was given, but the latest development follows an outcry after the paper 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.
But the proposal would have had a devastating impact on South Africa's investment industry, as retirement investments and other savings would have been channeled to the NSSF instead. Alexander Forbes, South Africa's biggest pension funds administrator, calculated that it would lose 60% of its members.
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.
When the Green Paper was first gazetted, on 18 August, the department of social development asked for public feedback by December this year.