POLL | Should you be allowed to access a portion of your retirement fund to pay off debts?

SA could soon see retirement fund reforms.
SA could soon see retirement fund reforms.
Image: 123RF/FLYNT

You could soon be able to access a portion of your retirement savings to help you out of a tight spot.

Finance minister Tito Mboweni announced on Wednesday that Treasury was in talks to allow those who lost their income during the Covid-19 pandemic to withdraw from their retirement funds.

“National Treasury is in discussions with Nedlac (National Economic Development and Labour Council) on a proposal for limited withdrawals from retirement funds for those losing part of their income during the Covid-19 pandemic,” he said.

He admitted it had proven to be “a complex problem to solve, if we are to ensure preservation of savings”.

“Government continues to engage with trade unions, regulators and other stakeholders to discuss how to allow limited withdrawals linked to tightening preservation by closing current loopholes, and also to expand coverage so that all those employed or earning an income are required to put aside a small proportion for saving for their future,” he added.

The move has drawn sharp debate on social media.

Cosatu welcomed the decision, saying the minister should implement it as soon as possible.

“We hope government will table this Bill in parliament as soon as possible so that it can be processed and finalised immediately.

“It is critical that workers be allowed access to their retirement savings because companies and the private sector in general has been offered various incentives and tax breaks to bail it out, while workers continue to struggle,” it said.

It follows a proposal by the DA to allow pension fund members to take out loans using their pensions as security.

Treasury rejected the proposal in March, pointing to the already high level of indebtedness and low level of savings in the country.

“The biggest problem is that South Africans don’t save enough and are highly indebted,” Treasury deputy director-general Ismail Momoniat said, adding that too often pension fund members cash out their savings when they resign.