August 2022
22Aug

South Africa. One simple decision can cost you 41% of your retirement

On the back of the widely known statistic that over 90% of South Africans are not in a position to retire comfortably, FNB Employee Benefits has also noted a growing trend amongst SME employees not fully understanding or saving enough for retirement. “Although up to 70% of our commercial banking employers currently don’t offer formal benefits to their staff members, the small and medium businesses that do offer these benefits are concerned at the low rate of retirement saving from...

August 22, 2022
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08Aug

South Africa. Proposed new ‘two-pot’ will allow one withdrawal per year from savings

On 31 July, the South African government announced the proposal of a “two-pot” retirement system. The proposed system will allow people to save for non-retirement purposes (e.g. emergencies) via their retirement funds and access one third of their retirement savings when needed. You can withdraw money once a year, as long as there is money in the savings pot. "These amendments aim to encourage members to preserve their retirement savings by making it more flexible to accommodate unforeseen pressures that members face...

August 8, 2022
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05Aug

On the Impact of Low Interest Rates on Common Withdrawal Rules in Old Age

By An Chen, Stefan Schelling & Nils Sørensen Ensuring a desired standard of living in retirement has been strongly challenged by increasing life expectancy, and simultaneously by the current and possibly long-lasting low interest environment. In contrast to literature in this field which claims annuitization of wealth being a vital part of retirement planning, many people manage their retirement savings and withdrawal policy during the retirement period independently. To this end, several easily applicable self-managed withdrawal rules are commonly recommended...

August 5, 2022
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02Aug

South Africa. Two-pot system will not make any pension savings immediately available

A call from National Treasury for public comment on proposed changes to legislation, as part of the overhaul of SA’s retirement savings industry, discloses a very important aspect about accessing your pension fund in that members of pension and retirement funds will not be able to access their existing pension fund money once the new legislation comes into effect next year. In effect, the new ‘two-pot’ system seems to have evolved into a ‘three-pot’ system. The most recent statement from Treasury...

August 2, 2022
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01Aug

South Africa’s Treasury Drafts Plan to Lift Retirement Savings

South Africa’s National Treasury has published draft reforms aimed at encouraging citizens to have easily accessible savings, while also ringfencing funds meant for retirement. The so-called two-pot system will allow individuals to contribute one-third of savings into an account that can be accessible at any time, while two-thirds must only become available at retirement. Read also South Africa. Two-pot system will not make any pension savings immediately available “The two-pot system option will present a better balance between ensuring preservation of retirement...

August 1, 2022
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April 2022
19Apr

Chile’s lower house votes on dueling pension withdrawal bills

Chile’s lower house will debate and vote on two proposals for early withdrawal of pensions on Monday, one by legislators and another by President Gabriel Boric, who is seeking to juggle inflation and populist demands. Leftist legislators are proposing a 10% withdrawal but Boric and Finance Minister Mario Marcel have said it would worsen spiraling inflation. In March, Chile reported its highest monthly inflation rate – 1.9% – since 1993. According to the government, Boric’s plan represents a fifth of the...

April 19, 2022
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18Apr

US. The age for required withdrawals from retirement accounts could go higher. Here’s who would benefit

Required minimum distributions, or RMDs, are amounts that must be withdrawn annually from qualified retirement savings accounts. If the RMD age is raised to 75 from 72, it would provide more time to move assets to a Roth individual retirement account, which comes with no RMDs during the owner’s lifetime. There are some instances when you may not want to convert money from a traditional 401(k) plan or IRA to a Roth. Some future retirees could end up getting...

April 18, 2022
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March 2022
18Mar

A Sustainable, Variable Lifetime Retirement Income Solution for the Chilean Pension System

By Olga Fuentes, Richard K. Fullmer & Manuel Enrique Garcia Huitron There is a need in pension systems to significantly improve the level and stability of pension payments as pensioners age. Solutions to address increased longevity and longevity risk should be not limited to increasing the take-up rate of annuities – explicit guarantees are costly in a low-interest rate environment, and lock-in of savings may not be in line with members' preferences. Our proposal is to develop a Sustainable, Variable...

March 18, 2022
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January 2022
04Jan

South Africa. Allowing withdrawals from pension funds to increase retirement savings

To allow limited withdrawals from pension funds will actually help people to save more for their retirement, according to a study by National Treasury. The research found that people sometimes resign from their jobs for the sole reason of accessing their pension fund in emergencies, and end up spending everything. The proposal to split retirement funds into two ‘pots’ and give people access to withdraw from one is expected to solve the problem. Treasury recently published more information on this and...

January 4, 2022
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October 2021
29Oct

How Chile’s Pension System Became a Covid Piggy Bank

Chile’s love-it-or-loathe it private pension system has long served as a pillar of the nation’s capital markets. Since the pandemic hit, it’s been serving another role, that of national piggy bank. Congress has passed three bills allowing savers to withdrawal billions of dollars. It’s now considering a fourth drawdown, a move that is worrying investors, pulling both the finance ministry and the central bank into the fray. The proposal is also spurring fresh political debate ahead of November’s presidential...

October 29, 2021
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