Limited withdrawal from pension funds is on the cards, says Mboweni
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Cape Town - Finance Minister Tito Mboweni has announced that changes to legislation governing retirement funds were on the cards to allow for limited withdrawal from retirement funds under certain circumstances.
Mboweni said the government sympathised deeply with the plight that South Africans were facing as a result of the Covid-19 pandemic.
"It is for this reason government has put in place a number of measures to alleviate the pressure on workers.
"Further, as announced in the recent medium-term budget policy statement, government will introduce necessary legislative amendments next year to allow for limited withdrawals from retirement funds under certain circumstances but linked to mandatory preservation requirements," he said.
Mboweni was responding to parliamentary questions from IFP MP Mzamo Buthelezi, who asked whether he had considered accessing unclaimed pension benefits to assist in alleviating the devastation of the pandemic on workers in vulnerable sectors.
The minister said the government has not considered the use of unclaimed retirement fund benefits as part of relief measures for the Covid-19 pandemic.
"No, as such funds are not centralised and held in one fund, and neither government nor any of the financial sector regulators hold or manage such funds, so there has not been any consideration to use unclaimed retirement fund benefits as a Covid-19 pandemic related relief measure," he said.
The minister also said unclaimed benefits were no different from any other retirement fund benefits, meaning the benefits belong to members and beneficiaries.
"They are therefore held and managed by boards of trustees of these funds, and not government. Government is therefore not in a position to access or utilise unclaimed retirement fund benefits."
Mboweni also said three recently related Supreme Court of Appeal judgments have also considered the manner in which unclaimed funds may be utilised under the current legislation.
"The use of unclaimed benefit funds needs to be appropriately legislated for, and the coming Conduct of Financial Institutions Bill takes the first steps in this direction, but is only expected to be enacted into law late next year."
In his response to a separate question, the minister said the best way to inspire confidence in any government project was to generate economic growth and rid the country of corruption and inefficiency.
He said the people should trust public servants who manage the projects in which they invest their funds.
"Government does not determine where retirement funds invest. It is the board of trustees of a retirement fund that determines the investment policy for that retirement fund as part of their fiduciary duty to the fund and its members."
Mboweni was asked by Buthelezi how he intended to inspire confidence in pension fund contributors and administrators to invest in the government’s planned infrastructure development projects.
The minister said trustees of retirement funds, like most investors, wanted to invest in a project as long as they have confidence in those managing such projects in a way that generates the returns that such investors expect.
He also said the recent medium-term budget policy statement outlined steps which the government intended to make to stabilise debt and generate more confidence, investment and economic growth.