News Column

Pension fund rumours 'not true'

September 5, 2014

FINANCE Minister Nhlanhla Nene yesterday dismissed as lies rumours that the government was nationalising retirement savings, and urged financial services sector, trade unions and business to speak out with facts.

'The government has never had, and does not have, any intention to nationalise these (retirement) funds. Rumours to this effect are a blatant lie," the minister said during a parliamentary debate.

His dismissal of such rumours comes two weeks after the government admitted that its communication on proposed retirement fund reforms had not been the best.

While such moves have been on the cards since early last year, the rumour mill got going after last month's finance ministry statement that the government believed it was too easy to withdraw retirement savings when changing jobs or resigning - and that the first set of reforms aimed at preserving retirement savings would be phased-in from March 1, 2015. Subsequently, reports surfaced of civil servants resigning to cash-out retirement savings on fears that they may no longer be able to access these.

"There can be nothing as risky as people resigning from their jobs to cash in their retirement funds and end up being unemployed and losing their security of an income. Such risks are not worth taking under any circumstances - let alone to resign from their jobs, when the reasons informing such decisions are false," he said.

The government did not know why workers and government employees were resigning on the basis of "false rumours and in- formation", but one factor could be over-indebtedness. "Many of our people are over-indebted and susceptible to income and price shocks," said Nene.

He pointed out that household indebtedness remained at about 75 percent of income, and only 10 percent of South Africans could retire comfortably. "Even if South Africans save, mainly through their retirement funds, they are very quick to withdraw from it," |he said. While South Africa's retirement system was working, cracks, like high-priced products to governance, needed fixing.

The ACDP said household indebtedness needed to be addressed. "The question is whether workers are cashing out their pension and provident savings earlier because of debt, or because of these rumours," said MP Steve Swart.

Cape Argus

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Source: Cape Argus (South Africa)

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