{"id":489535,"date":"2021-05-11T16:18:43","date_gmt":"2021-05-11T14:18:43","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=489535"},"modified":"2021-05-11T16:18:43","modified_gmt":"2021-05-11T14:18:43","slug":"proposed-pension-changes-could-make-it-virtually-impossible-to-retire-comfortably-in-south-africa-ceo","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/489535\/proposed-pension-changes-could-make-it-virtually-impossible-to-retire-comfortably-in-south-africa-ceo\/","title":{"rendered":"Proposed pension changes could make it virtually impossible to retire comfortably in South Africa: CEO"},"content":{"rendered":"

The Pensions Funds Amendment Bill currently being considered in parliament<\/a><\/strong> could cause significant damage to the retirement industry, says Glenn Gamsy, chief executive of GIB Financial Services, a financial advisory consultancy and retirement fund administrator.<\/p>\n

The bill, which has been proposed by the Democratic Alliance, will allow retirement fund members to access a portion of their retirement savings in cash before retirement as a guarantee for a loan.<\/p>\n

The DA has proposed that the law be amended to allow retirement fund members to access up to 75% of their retirement savings as security for a bank loan, instead of the current circumstances where members can use their savings as surety to obtain a home loan only.<\/p>\n

Gamsy said that while there is a need to provide households with access to cash to ease financial shortfalls – particularly during times when consumers are financially under significant stress – accessing cash from retirement funds will have a significant impact on the levels of retirement savings.<\/p>\n

“High withdrawals, both from a volume and value perspective, will be disruptive on several levels.<\/p>\n

“Apart from increasing the administrative burden on retirement fund administrators, the knock-on effects are substantial and have the potential to impact the economy given the scope of retirement fund investments in current and planned infrastructure projects .”<\/p>\n

Gamsy said his firm’s other major is the impact this will have on funds available to members upon retirement.<\/p>\n

“At its core, pension fund legislation is designed to safeguard retirement savings to ensure that consumers can sustain their lifestyles upon retirement. Prudent retirement planning and saving can literally be a lifesaver at times when expenses remain but there is little or no additional income.\u201d<\/p>\n

The end of a comfortable retirement in South Africa\u00a0<\/strong><\/p>\n

Gamsy said that\u00a0South Africans historically have a low savings culture and it is estimated that only between 6% to 8% of workers save enough to retire comfortably.<\/p>\n

Allowing consumers to access 75% of their retirement savings before retirement will render it virtually impossible for them to maintain a suitable standard of living when they stop working, he said.<\/p>\n

Exacerbating this is the culture of consumerism, conspicuous consumption and instant gratification and there is no way of guaranteeing that retirement fund cash withdrawals will be used responsibly.<\/p>\n

\u201cThis is a complicated issue, and we are fully aware of the economic and political sensitivities around this debate. However, we are equally aware of the potential repercussions down the line.”<\/p>\n

A retirement fund is a financial asset designed to cushion consumers from retirement age onwards, Gamsy said.<\/p>\n

He added that there is no point in using pension funds to solve an immediate problem if this results in an inability to fund a lifestyle post-retirement, which will see further burdens on the state social security system.<\/p>\n

“We are aware that government continues to engage a broad group of stakeholders on this matter, and we acknowledge there is an urgent need to provide some form of short-term support, but we urge players to take a longer-term view that maintains the integrity of the pension fund foundation and protects consumers by giving them a guaranteed retirement safety-net rather than having to rely on government in their later years.”<\/p>\n

\n

Read: Why the rand\u2019s rally under R14 to the dollar might not be over yet<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

The Pensions Funds Amendment Bill currently being considered in parliament could cause significant damage to the retirement industry, says Glenn Gamsy, chief executive of GIB Financial Services, a financial advisory consultancy and retirement fund administrator.<\/p>\n","protected":false},"author":10,"featured_media":101676,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[26],"class_list":["post-489535","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/489535","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=489535"}],"version-history":[{"count":5,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/489535\/revisions"}],"predecessor-version":[{"id":489659,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/489535\/revisions\/489659"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/101676"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=489535"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=489535"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=489535"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}