{"id":856135,"date":"2026-04-08T07:00:00","date_gmt":"2026-04-08T05:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=856135"},"modified":"2026-04-08T06:37:31","modified_gmt":"2026-04-08T04:37:31","slug":"government-must-think-twice-about-emergency-access-to-south-african-pension-funds","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/856135\/government-must-think-twice-about-emergency-access-to-south-african-pension-funds\/","title":{"rendered":"Government must think twice about ’emergency\u2019 access to South African pension funds"},"content":{"rendered":"\n

Both South Africans and the national fiscus face financial risk if the government follows through on its floating idea to allow limited access to the locked position of the retirement pot.<\/p>\n\n\n\n

This is the warning from Ronald King, Head of Public Policy & Regulatory Affairs at PSG Financial Services.<\/p>\n\n\n\n

He explained that South Africa\u2019s retirement reform was designed to give consumers limited access to cash in times of need without destroying their long-term savings. <\/p>\n\n\n\n

However, the National Treasury is considering allowing limited access to funds that are currently strictly preserved until retirement under \u201cvery strict\u201d conditions.<\/p>\n\n\n\n

Chris Axelson, deputy director-general for tax and financial sector policy, said<\/a> that discussions around potential reforms to the two-pot retirement system are expected to begin later this year.<\/p>\n\n\n\n

\u201cThere were some requests for refinement for the two-pot regime. We do aim to initiate discussions later this year to talk about potential access to the retirement pot, but only under very strict financial distress conditions,\u201d he said.<\/p>\n\n\n\n

However, speaking in an interview with 101.3FM<\/a>, King warned that the government must be extremely cautious about going any further.<\/p>\n\n\n\n

King said the success of the new two-pot retirement system relies on the fact that not all of a member\u2019s pension savings are available for withdrawal. <\/p>\n\n\n\n

\u201cThe thing that really made this access in the two-part system work was the fact that it came with a provision that the other two-thirds would remain,\u201d he said.<\/p>\n\n\n\n

He argued that the safeguard is what prevents the system from becoming a slow-motion collapse of retirement security. <\/p>\n\n\n\n

According to King, the entire purpose of the reform was to improve preservation after years of South Africans cashing out retirement funds when changing jobs or resigning.<\/p>\n\n\n\n

\u201cThis kind of struck that balance saying, well, you can access it a little bit, but two-thirds were off limits, and you\u2019d have to annuitise that,\u201d he said.<\/p>\n\n\n\n

Sanity will likely prevail<\/h2>\n\n\n
\n
\"\"<\/a>
Ronald King, Head of Public Policy & Regulatory Affairs at PSG Financial Services<\/em>.<\/figcaption><\/figure><\/div>\n\n\n

King stressed that the true cost of early access is often badly underestimated because the loss actually stretches far beyond retirement age.<\/p>\n\n\n\n

\u201cYour retirement date is not the actual date that you need to quantify this loss to. If you\u2019re going to live to 95 or 100, and you\u2019re currently 40, you\u2019re talking about damage that is quantified over 50 years,\u201d he said.<\/p>\n\n\n\n

He explained that for every R1 you take out of your retirement savings, you are hurting your future retirement by R7.<\/p>\n\n\n\n

That pain is worsened by the tax. King said South Africans are effectively penalising themselves twice. <\/p>\n\n\n\n

\u201cIf you withdraw R15,000 from your retirement fund, R5,000 of that is in any way not going to reach your pocket. Only R10,000 is going to reach your pocket, but you\u2019ve lost R15,000, and you\u2019ve lost that R15,000 multiplied by seven.\u201d<\/p>\n\n\n\n

King warned that easier access to pension savings could have serious economic consequences. <\/p>\n\n\n\n

He explained that the retirement industry\u2019s large pools of capital are essential to South Africa\u2019s long-term investment needs. <\/p>\n\n\n\n

\u201cThis money that is in the retirement fund industry is the money that is currently being focused on redeveloping our infrastructure,\u201d he said.<\/p>\n\n\n\n

\u201cThe moment that those funds do not know whether you are going to draw that money next year or not, they cannot make long-term investments.\u201d<\/p>\n\n\n\n

This uncertainty would force retirement funds to hold more conservative, short-term assets. \u201cThey suddenly now need to put the money in the bank because you might draw it tomorrow,\u201d King said. <\/p>\n\n\n\n

He also warned that weakening retirement preservation now could eventually become a major fiscal problem for the state. <\/p>\n\n\n\n

\u201cIf more and more people end up at retirement without retirement savings, you can just see that the number of people that would need a subsidy from the government will just increase,\u201d he said.<\/p>\n\n\n\n

Additionally, weaker growth and fewer long-term investments would mean lower tax revenue, which could create a debt spiral for the country as a whole.<\/p>\n\n\n\n

Despite the public pressure for relief, King said he still believes Treasury will hold the line. \u201cI have a lot of faith and trust in our National Treasury and our Reserve Bank,\u201d he said.<\/p>\n\n\n\n

\u201cI think that the National Treasury is doing what it should do, listening to everyone out there. But I do believe that sanity will prevail, and I don\u2019t think this will happen.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Both South Africans and the national fiscus face financial risk if the government follows through on its floating idea to allow limited access to the locked position of the retirement pot.<\/p>\n","protected":false},"author":92,"featured_media":856137,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[3796,23466,853,19264],"class_list":["post-856135","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-national-treasury","tag-psg-financial-services","tag-south-africa","tag-two-pot-retirement-system"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/856135","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\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=856135"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/856135\/revisions"}],"predecessor-version":[{"id":856200,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/856135\/revisions\/856200"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/856137"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=856135"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=856135"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=856135"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}