Finance Minister Nhlanhla Nene yesterday dismissed as lies recent rumours that the government was nationalising retirement savings, and instead urged the financial services sector, trade unions and business to present the facts.
“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 its communication on proposed retirement fund reforms had not been the best.
While such moves have been on the cards since early last year – proposals were circulated following the 2013 Budget – the rumour mill really got going after last month’s Finance Ministry statement that the government believed it was too easy to withdraw retirement savings on changing jobs or resigning – and that the first set of reforms aimed at preserving retirement savings would be phased in from March 1 next year.
Subsequently reports surfaced of civil servants, particularly teachers and police officers, and workers resigning to cash out retirement savings on fears 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.”
Saying the government did not know the underlying reasons why workers and state employees were resigning on the basis of “false rumours and information”, the finance minister said one factor could be over-indebtedness.
“Many of our people are over-indebted and susceptible to income and price shocks,” he noted, pointing out household indebtedness remained stubbornly high at around 75 percent of annual income and only 10 percent of South Africans could retire comfortably.
“The challenge is that even if South Africans save, mainly through their retirement funds, they are very quick to withdraw and spend their retirement savings when they change jobs. This leaves most of us vulnerable in our retirement as we would not have accumulated enough savings to retire comfortably,” Nene added.
The African Christian Democratic Party (ACDP) welcomed the minister’s clarification, but stressed household indebtedness needed to be addressed.
“The question is whether workers are cashing out their pension and provident savings earlier because of high levels of debt or because of these rumours,” ACDP MP Steve Swart said.