Treasury opposed to Pension Funds Act changes allowing members access to loans
Treasury was taking part in public hearings on the Pension Funds Amendment Bill which is aimed at giving people who find themselves in dire financial straits a chance to access their pension savings to ease their distress without first having to quit their jobs.
CAPE TOWN - National Treasury said that it was opposed to changing the Pension Funds Act to allow members to access a portion of their savings before retirement as a guarantee for a loan.
Treasury was taking part in public hearings on the Pension Funds Amendment Bill. This is a private member’s bill submitted by the Democratic Alliance (DA).
It’s aimed at giving people who find themselves in dire financial straits a chance to access their pension savings to ease their distress without first having to quit their jobs.
Treasury’s Ismail Momoniat said that retirement reforms were a major project under discussion at Nedlac in a bid to provide a comprehensive social security net.
But he said that the DA’s Pension Funds Amendment Bill was not the way to go.
"The bill is not supported by Treasury because we believe it brings great risk to members of retirement funds and their funds – allowing loans for housing or anything else is not supported because it works against the very concept of saving," Momoniat said.
Cosatu has welcomed the bill while acknowledging that it would need changes to strengthen it.
Cosatu has been calling for some time for employed workers to be allowed to access a portion of their pension savings as surety for loans but believes this should amount to 30% or R30,000 and not the 75% provided for in the bill.
The SA Institute of Chartered Accountants (Saica) said that the bill could be worked on and Dion George, the DA member who drafted it, said that he was prepared to tweak it as necessary.
The Standing Committee on Finance will consider the submissions on the bill.