South Africa. The battle for pension savings: Between secure retirement and survival
The retirement savings industry keenly follows Finance Minister Tito Mboweni’s speech every year, if not for anything else, to advise savers how to maximise their tax benefits when tax rates and bracket adjustments are announced.
The 2021 Budget speech, however, had a lot of game changers for the industry. The automatic enrolment of workers into retirement plans that the sector has long been advocating for, and the annuitisation of provident fund benefits – which has been delayed over and over again in the past – finally came into effect on 1 March.
However, there was one missing crucial announcement in the Budget speech that could have sent the retirement savings on a tailspin: the way forward for the Pension Funds Amendment Bill of 2020, allowing workers to partially access their retirement savings in cash.
In the Budget Review booklet, Treasury did briefly touch on the proposals for allowing individuals to partially access their retirement savings. It said government continues to engage with trade unions, regulators and other stakeholders about this.
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