Independent Online

Wednesday, May 25, 2022

Like us on FacebookFollow us on TwitterView weather by locationView market indicators

ANC opposed to Pension Fund Amendment Bill which could affect borrowers

FILE - Reserve Bank Governor Gill Marcus holds bank notes bearing the image of former President Nelson Mandela in Pretoria, South Africa, in this Nov. 6, 2012 file photo. Across South Africa Mandela's face is a familiar sight, beaming from T-shirts, drink coasters and bank notes. On Thursday, Dec. 5, 2013, Mandela died at the age of 95. (AP Photo/Denis Farrell, File)

FILE - Reserve Bank Governor Gill Marcus holds bank notes bearing the image of former President Nelson Mandela in Pretoria, South Africa, in this Nov. 6, 2012 file photo. Across South Africa Mandela's face is a familiar sight, beaming from T-shirts, drink coasters and bank notes. On Thursday, Dec. 5, 2013, Mandela died at the age of 95. (AP Photo/Denis Farrell, File)

Published Dec 1, 2021

Share

SOME of the members of Parliament’s standing committee on finance have objected to the Pension Funds Amendment Bill which seeks to allow the public to gain access to their funds through loans.

The bill was initiated by DA committee member Dr Dion George last year with the aim to amend the Pension Funds Act to allow pension fund members to access a portion of their fund before retirement as a guarantee for a loan.

Story continues below Advertisement

As it stands, Section 19 of the Pension Funds Act currently enables pension fund members to access a loan, where the pension fund asset acts as security for such a loan, in order to obtain a home loan. However, the Act does not permit pension fund members to obtain a loan for any other purpose.

According to George, the outbreak of the Covid-19 pandemic has severely impacted the country’s economy and has led to many South Africans becoming financially destitute.

The amendment explains that the bill seeks to amend the Act in order to allow pension fund members to obtain a loan, secured by a guarantee from a registered pension fund, to alleviate financial pressure during an emergency such as the Covid-19 emergency or any other emergency similar to the pandemic.

It further states that a member will then be allowed to access a pension-backed loan and will be able to leverage their pension fund investment prior to their retirement date, without eroding their provision for eventual retirement. This will resort to lending institutions enabling loans to pension fund members at competitive interest rates and over extended or deferred payment periods given that the loan is fully guaranteed.

Stakeholders who made submissions to the committee in August include National Treasury, Cosatu, Fedusa, the Association for Savings and Investments South Africa, the Batseta Council of Retirement Funds (Batseta), the Institute of Retirement Funds Africa (IRFA), the South African Institute of Chartered Accountants (SAICA), Banking Association of South Africa (BASA), and the Dear South Africa campaign.

The committee received a letter from George seeking to effect amendments to the bill to limit the percentage of the pension funds backed loans to 30%, instead of the 75% initially proposed in the bill.

Story continues below Advertisement

The four ANC committee members not in favour of the bill include Jim Skosana, Kenneth Morolong, Dorothy Mabiletsa and Zanele Nkomo.

The majority of stakeholders expressed general sympathy towards the objective of the Bill of providing relief to those members of pension funds who were temporarily in financial hardship as a result of the current pandemic, but rejected the bill.

Chairperson Joe Maswanganyi said the committee notes that while stakeholders sympathised with the objectives of this bill, they regarded it as inadequate and submitted that it did not address issues in a comprehensive manner.

Story continues below Advertisement

Mabiletsa said the job of the committee is to represent the people of the country.

“The problem of the amendment bill is that it applies a loan facility which is only going to place the applicant in further financial distress due to the interest rates. This favours the lender. This amendment is undesirable because it is going to generate further inequality.

“The public should know that when you get a loan you must pay. If you don’t pay on time, there will be interest rates,” she said.

Story continues below Advertisement

FF Plus MP Wouter Wessels said the bill is not perfect, but added that in the party’s view and with certain amendments, it will serve a good purpose to enable pension funds to allow for members to utilise their funds as guarantees towards personal loans subject to the specific fund’s rules.

The bill is yet to be tabled to the National Assembly.

[email protected]

POLITICAL BUREAU

Related Topics:

Share