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Proposed South African Reforms May Triple Income for Pensioners

Proposed South African Reforms May Triple Income for Pensioners

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.

South Africa Plans Limited Early Access to Retirement Funds

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.

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