Pretoria – Government on Thursday once again reassured South Africans that it has no plans to nationalise people’s hard earned pension funds.
“There is no intention on the side of the government to nationalise. What we seek to do is to develop a culture of savings amongst South Africans.
“All these tax reforms that were introduced last year and are coming into effect are aimed at ensuring that we create better savings for the people of our country,” Minister in the Presidency for Planning, Monitoring and Evaluation, Jeff Radebe, said.
Minister Radebe was briefing media after Cabinet held its fortnightly meeting, where they noted the misinformation about the various reforms regarding retirement funds (pension and provident funds).
“There is anecdotal evidence that some workers are resigning from work on fears that government will from next year prevent them from withdrawing their retirement savings when they change jobs, and that government wants to take over retirement funds,” said Minister Radebe.
Deputy Director-General for Tax and Financial Sector Policy at National Treasury, Ismail Momoniat, said Treasury has been in talks with certain pension funds.
“We have been talking to certain pension funds like GEPF [Government Employees Pension Fund]. We’ve seen a slight rise [in resignations] but it does take a while; there’s a lag before they get information. If somebody resigns today, in terms of GEPF, it may take up to two or three months before GEPF … gets that info and starts executing such instruction,” Momoniat said.
National Treasury has been getting a lot of queries around the reforms.
“We’ve also talked to industry and employers. A lot of the pressure is linked to levels of indebtedness. We want to take action before people cash in their pension funds.
“What people are doing is that they’re resigning from their jobs and it also means there’s no assurance that they’re going to get their job back. This is a risky action to take. The risk is also one of unemployment,” said Momoniat.
Minister Radebe said that while government wants to encourage workers to preserve their savings until retirement, no laws have changed to stop withdrawal when workers change jobs.
The various retirement reform proposals seek to:
- Encourage individuals to provide adequately for their own retirement
and the needs of their dependents and to provide for retirement
funding as part of the remuneration contract;
- Make retirement funding arrangements cost-efficient, prudently
managed, transparent and fair; and
- Improve standards of fund governance, including trustee knowledge and
conduct; protection of members’ interest, accountability and
disclosure of material information to members and contributors.
“Cabinet wants to assure the public that people’s retirement savings remain safe. There is no reason for any worker – both in the private and public sector – to resign so as to access their retirement savings.
“It should also be noted that those cashing out their pension or provident funds before retirement will not only get less money than they would had they preserved, but they may be taxed on early withdrawals and no longer enjoy the tax advantages,” said Minister Radebe.