Financially Stressed Consumers May Soon Be Allowed To Draw Part Of Their Pension
Limited Withdrawals From Pensions On The Cards?
Finance Minister, Tito Mboweni has made public comments about how, after a lot of pressure and negotiations, there may be some changes made to when and how people can access some of their pension funds.
At the moment these funds can only be accessed when a person retires or resigns or is retrenched. The Minister said that he is putting pressure on the National Treasury to put changes in place that will allow for a percentage of the funds to be accessed early.
Big Changes Take Time & New Laws
This requires a formal Bill and Act to be passed by Parliament and signed off by the Presidency so it is not a fast-moving thing. This may not come into effect before year end or possibly even half way through 2022.
It also has massive implications for the industry and consumers’ future financial wellbeing. Because interest is such a big part of pension savings, the end balances available in the future will be hard hit by withdrawing even a small percentage and there is a lot of concern about how this will hurt consumers down the line. Even though this is true, desperate consumers (represented by unions etc) say they need money now and can’t be overly concerned about the future.
Also, government is looking for ways to tie pension funds (up to 45% of investment) into local infrastructure building as a way to boost available funding for government spending. So, they are hesitant to take a lot of money out of that pot.
If you are struggling to save anything then be sure to read the recent issue of Debtfree Magazine (issue 7/2021).