Finance minister Tito Mboweni wants a key regulatory change that will allow South Africans to access their retirement funds early.
The finance minister said in a media briefing on Wednesday (28 July), that the change will be made with the proviso that workers use any funds in a responsible manner.
He said that workers should be able to access a portion of their retirement funds during ‘difficult times’ – whether it be for a bond repayment or to pay off debt.
“A portion of their retirement funds, workers should be able to access, to finish off bond repayment whatever debt they are in … I must warn that it must be used for purposes of relief and making better their own situation.”
“The matter – which seems to be stuck somewhere in the system – has to do with making allowance for workers to have access to a percentage of their retirement funds times of difficulty,” the minister said.
However, Mboweni also cautioned that people must ensure that they use this facility for purposes of relief and improving their financial situation.
This follows a similar proposal by the opposition Democratic Alliance through its Pensions Funds Amendment Bill.
The bill, which has been shot down by Treasury, would allow retirement fund members to access a portion of their savings in cash before retiring as a guarantee for a loan.
The DA has proposed that the law be amended to allow retirement fund members to access up to 75% of their savings as security for a bank loan, instead of the current circumstances where members can only use their savings as surety to obtain a home loan.
Treasury did not give its support to the DA’s bill as it was concerned that members would wipe out their funds.
It has not been made clear how Mboweni’s proposed change would differ from that proposed by the opposition party.