Trade federation Cosatu says that it will press government to make amendments to the Pensions Act to allow workers in financial distress to access their pension funds early.
The federation’s Matthew Parks told the SABC that the process must be concluded as soon as possible so that it kicks in by the beginning of next year.
He added that the amendments are necessary to give support to workers who are struggling after losing their jobs during the Covid-19 pandemic.
“There is a private members bill currently at Parliament. Cosatu feels this is a good platform to engage and address some concerns and provide workers limited access to their pension funds to enable them to survive for another day.
“It is important to get the balance between giving workers relief and also ensure the sustainability of pension funds so that when workers retire they have sufficient funds to take care of them.
“The point is something needs to be done urgently, government needs to move with speed,” he said.
The Pensions Funds Amendment Bill, proposed by the Democratic Alliance, and currently being considered in parliament, will allow retirement fund members to access a portion of their retirement savings in cash before retirement as a guarantee for a loan.
The DA has described the draft bill as crucial in the fight for ‘people power over state power’ in South Africa.
“Individuals should be free to choose, in unison with the trustees of their pension funds, how their own financial assets are utilised when it comes to providing collateral for responsible loans,” it said in an explanatory statement.
“It is important to note, however, that this bill entails no prescribed asset function. Instead, it entails giving individuals the freedom to choose for themselves by alleviating state interference on their lives.”
The bill would amend the current Pension Funds Act to allow pension fund members to obtain a loan, secured by a guarantee from a registered pension fund, to alleviate financial pressure during an emergency.
In this case, the bill makes direct reference to the Covid-19 emergency or any other emergency similar to the pandemic.
By enabling a member to access a pension-backed loan, that member will be able to leverage their pension fund investment prior to their retirement date, without eroding their provision for eventual retirement.
Lending institutions will be able to offer loans to pension fund members at competitive interest rates and over extended or deferred payment periods given that the loan is fully guaranteed.