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Proposed SA reforms may triple income for pensioners

The new plan would allow a portion of savings to be accessed ahead of retirement while the balance is reserved for the longer term.
Image: Moneyweb

South Africa’s proposed new retirement-savings system has the potential to triple pensioner income and should allow for early access of funds, according to modeling by the nation’s Actuarial Society.

The new plan would allow a portion of savings to be accessed ahead of retirement while the balance is reserved for the longer term. The government has said the objective is to encourage a better savings culture in the nation.

If two-thirds of the funds are put away for longer that should improve the outcome threefold, actuary Natasha Huggett-Henchie said in a statement on Thursday. “Access to the one-third should therefore be available to all retirement fund members regardless of need,” she said.

The reforms have been on the agenda for almost a decade, but gained momentum after coronavirus lockdowns battered the economy and pushed the unemployment rate to a record high. That’s led to mounting calls on the government to make retirement provisions more readily accessible — a step that could have dire consequences if mishandled and pensions are squandered.

Some initial controls are needed to avoid this, Huggett-Henchie said, such as limiting the number of withdrawals and capping the rand amount.

© 2021 Bloomberg

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What a lot of hogwash, the more you withdraw from your pension now the smaller monthly payments you will receive be when you retire – that is it.

You get out what you pay in plus a growth – the pension funds do not perform miracles, they are no financial magicians.

Oh for you thinking of ever consolidating your pension and provident preservation funds into one, I have shocking news for you, ‘section 14’ takes years to resolve with many phone calls, emails and complaints.

The ANC is now using ” Chinese Accounting”.
Will have 3 x as much after withdrawing a third ? ? ?

Every time government makes a change to the Pension fund industry, the mountain of paper work for the pensioner gets bigger than the actual value of your pension.

And SARS also, the amount of paper work to and from SARS is bigger than your pension value eventually!

I am contemplating reducing my pension contributions next year.

What lunacy is this. A case of eat your cake now and still have it. SA is truly doomed if this is what actuaries actually believe.

ADVANCE WITHDRAWALS IS NOT A SOLUTION BUT AN EPHEMERAL GRATIFICATION AND A LONG TERM RISK. IF ONE DID NOT PUT EXTRA IN THEIR RETIREMENT SAVINGS DURING THE FUNDS ACCUMULATION STAGE, THE MONTHLY WITHDRAWALS ON THE FULL PENSION, LIVING OR LIFE ANNUITIES IS HARDLY SUFFICIENT FOR DAY TO DAY LIVING EXPENSES. THIS IS EXACERBATED BY THE FACT THAT THE MONTHLY PENSION PAYOUTS ARE SUBJECT TO TAX. THE PENSIONERS ALSO PAY TAXES LIKE EVERYONE ELSE ON MANY TRANSACTIONS – VAT, PETROL LEVY, MEDICAL SERVICES, THE LIST GOES ON.
THE EARLY WITHDRAWALLS WILL NOT BE NECESSARILY SQUANDERED BUT USED FOR HIGH INFLATION LAIDEN NECESSITIES OF LIFE.

Very, very misleading title.

Basically people are taking all their pensions at times & then don’t have enough.
So (typical politicians) they want to lock in 2/3s but claim they’re helping people.

Ask yourself why they’re taking the pensions to begin with!?

End of comments.

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