Finance Minister Enoch Godongwana says a draft legislation that proposes partial access to retirement funds, while encouraging a preservation of a bulk of individual retirement savings, will be published by mid-year.
The Minister said this when he tabled his Budget Speech at a sitting of Parliament in Cape Town on Wednesday.
“Government has also proposed a fundamental restructuring of the retirement system for individuals to allow for greater preservation and partial access to funds through a “two-pot” system.
“Part of this proposal includes the possibility of short-term access, which would be dependent on the approval by trustees of each fund,” he said.
Godongwana said consultations are proceeding following the release of a discussion paper last year and the draft legislation on these amendments will be published for comment in the middle of the year.
The discussion paper, titled Encouraging South African Households to Save More for Retirement, was published in December 2021.
It outlines a set of reforms to enable pre-retirement access to a portion of one’s retirement assets, while ensuring that the remainder is preserved for retirement.
Proposal to use retirement funds for investment in infrastructure
Godongwana said retirement funds play a critical role in channelling savings into productive investments.
He said Regulation 28 of the Pension Funds Act sets out the criteria through which these funds may make investments.
“Changes have been proposed to these regulations to enable greater investment in infrastructure by these funds.
“After consultation on these changes, the amendments will be gazetted next month.”
Source: South African Government News Agency