Speech on the Revenue Laws Amendment Bill [B39B-2023]
Speech by ACDP MP, Steve Swart

Issued by the ACDP Parliamentary Media Office

Proposed two-part retirement system welcomed

Feb 20, 2024

House Chair

The ACDP understands the severe financial constraints faced by households and the fact that many people have been forced to resign to access their savings with dire long-term consequences.

To tackle these issues the two-part retirement system is proposed. Under this system, and as is set out in this bill, contributions and their growth within retirement funds remain tax-exempt. Individuals will not be taxed on their contributions or the growth of those contributions. This, the ACDP supports.

This pension reform will, in our view, strike a balance between long-term security and immediate needs, recognising life’s unpredictability. It permits fund members to access a portion of their savings during a crisis as those seen during the Covid-19 challenges. The change also ensures that the retirement system remains responsive to diverse financial needs, supporting both long-term financial security and immediate assistance during such emergencies as pointed out by other speakers.

One of the significant areas of contention was the proposed implementation date and it is regrettable that the Pension Fund Reform Bill was only tabled in January. The debate during the Committee’s hearings was that the initial date of 1 March 2024 should not be applicable because the required pension form structures would not be in place in time. Following consultations with the Minister of Finance, the Committee agreed on a revised date of 1 September 2024.

The ACDP supports the comment in the Committee Report of a broad (robust) public awareness and education campaign to inform retirement fund members about the features and benefits of the proposed two-part retirement regime. The last thing one wants is for individuals to withdraw those funds to the detriment of their long-term savings. They must take great care and must be able to make an informed decision about their retirement savings before they access it, because, as we know, there is a very low proportion of people in South Africa that have sufficient funding in their retirement schemes to look after them in the long-term and their old age. Of course, we appreciate that there may be financial constraints and emergencies now that necessitate a drawing.

So, to repeat, the ACDP supports this report and the bill, and retirement pension reform in general.

Thank you.

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