South Africans are waiting in anticipation for Finance Minister Enoch Godongwana to deliver his maiden Medium Term Budget Policy Statement (MTBPS).
Minister Godongwana will outline government spending and highlight how this will impact consumers. Some quarters are waiting eagerly to hear if the minister will provide more information around a bill that would give workers early access to their pension funds.
Earlier this year National Treasury announced a proposal that would allow workers to access money from their pension funds. This proposal gained traction after a volatile 18 months which saw many lose their income and their ability to earn money due to the Covid-19 pandemic and subsequent lockdowns.
“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 extraordinary circumstances,” read the statement from treasury.
10X Investments CEO Tobie van Heerden says his company supports the two-bucket approach proposed by the government. He explains that often when employees leave their jobs and decide to take their retirement funds, they often take too much money. This leaves them in a situation where they are unable to retire.
He said, “we very much support [the policy] at 10x as a policy so that at least a large portion is retained by the employee or by the person leaving and that they have some money at the end also to then spend on the things they need to spend on like bread and the basics as they leave”.
Van Heerden says there must be legislation introduced by the government that requires people to save for retirement. According to Van Heerden, 93% of South Africans don't have enough money to retire. He says that while the impact of people saving a small amount of money over their lifespan could have a massive impact on their lives. He does warn that the consequences of not saving could have South Africa in dire straits.