The National Treasury has provided more information around a proposal that would allow members to draw a portion of their retirement pension funds early in the case of emergency or extraordinary circumstances.
The government has announced that it is engaging with trade unions, retirement funds, regulators and other stakeholders on what the best way would be to increase savings and improve preservation and allow limited withdrawals, without creating liquidity and investment risks.
This is just a proposal for now. The government explained that for this policy to be considered, it would require law changes and new legislation.
A statement released in August explains that the government is looking at a sustainable solution that would ensure that people who do decide to withdraw funds from their pensions still have money left for when they retire.
"Government has been working on a more structured two-bucket system that will enable the restructuring of future contributions. One bucket is to be preserved until retirement, and the second bucket will allow for pre-retirement access during emergencies or extra-ordinary circumstances," read the statement.
National Treasury has however stated that it does not support the recently tabled Private Members Bill proposed by The Democratic Alliance’s Dion George, that would allow members of the public to leverage their retirement funds to secure a home loan.
George has said that Treasury has misunderstood the bill. He explained that the “argument is that the money will come out the fund and it will collapse the system etc that is not so and that argument is technically wrong”
“The money is not withdrawn, the money stays in the fund and it continues to grow as the member repays the loan. Yes it is true that if you don't pay the loan back, the same as if you've got a home loan at the moment, then the fund would have to make good on that surety”