House Chairperson,
Cornelius Sebothoma, in his late fifties, has been a teacher for more than twenty years. In 2021 he expressed his severe disappointment that Treasury then would not allow government employees who belong to the government pension fund to make emergency withdrawals. Speaking in 2021 at a time when there was widespread unemployment and poverty caused by the long and hard Covid 19 lockdown, he said such a withdrawal would have helped his family and many others at the time.
House Chair, regrettably, many employees would have resigned at that time to access pension funds to make ends meet. This would have been a short-term solution as those workers would have joined the ranks of the unemployed.
The situation for households now has gotten worse with severe cost of living increases. At least Mr Sebothoma would be pleased with today’s Bill, but, I’m sure he would not have been pleased with the high tax rates that he will have to pay when he withdraws his funds. It is also not sustainable in the long run where savings in the country are already at a very low level.
However, the ACDP does believe that the bill is a step in the right direction and that the focal point of the Pension Laws Amendment Bill is the two-pot retirement system whose primary objective will be to provide flexibility for fund members to access their retirement savings during such emergencies without necessitating resignation.
Chairperson, we note that the effective date was initially to be March 2024, but after consultation between the portfolio committee, stakeholders, National Treasury and the Minister, it will and will be September 2024.
The ACDP notes that a robust public awareness and education campaign to inform retirement fund members about the features and benefits of the proposed “two-pot” retirement regime is necessary as this will empower individuals to make informed decisions about their retirement savings.
We also support the note in the report that regulatory agencies should heighten their monitoring of the implementation of this new retirement system and ensure compliance with the proposed rules to ensure that it undergoes periodic reviews and adjustments with the need to adapt to changing economic conditions, demographics, and member needs.
The ACDP will support this report and the bill.
I thank you.
