Parly unanimously endorses new bill allowing pension fund holders to withdraw savings early
Opposition parties in Parliament have cautioned that while pension fund reform is necessary, the amendment bill could result in workers retiring poor from regular withdrawals.
Retirement planning, breaking into piggy bank savings. Picture: 123rf.com
CAPE TOWN - The National Assembly has unanimously endorsed a new bill that will make it possible for pension fund holders to withdraw a portion of their savings before retirement.
However, opposition parties have cautioned that while pension fund reform is necessary, this is not a sustainable way for South Africans to deal with the cost-of-living crisis and their throttling debt.
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The Pension Funds Amendment Bill will introduce what has become known as the two-pot system on 1 September.
Opposition parties are concerned about the impact of regular withdrawals from pension fund savings, and that workers could retire poor.
The Democratic Alliance and African Christian Democratic Party said if the economy performed better, the taxation rate on these withdrawals could be lower.
The Economic Freedom Fighters, meanwhile, said workers should not be struggling to the extent that they are driven to tapping into their pension funds, while the Freedom Front Plus said workers should rather be encouraged to save for their retirement.
However, the Deputy Minister of Finance, David Masondo, said the option should only be exercised in times of dire financial stress.
“This is in the interest of economic growth because the economy can only grow if you’ve got savings. Money capital comes from savings, which we utilise to deploy in the economy in order to grow the economy.”
The bill will now be sent to the National Council of Provinces for concurrence.