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.