The changes required for people to get a lump sum from their retirement funds are still at least a year away, so a quick payout is not on the cards
Finance minister Tito Mboweni caused much misunderstanding last week when he said he had instructed his officials to expedite the matter of enabling people to withdraw part of their pension as the matter had been “stuck in the works too long.” This created the impression that this could be done soon and quite easily, and within weeks people could have a lump sum of their retirement savings in hand.
The withdrawals issue was first raised by Cosatu at Nedlac in May last year as part of discussions around financial relief for workers and households as a result of the Covid-19 pandemic and lockdown. The Treasury has long resisted the total withdrawal of pensions before retirement — it frequently happens when people resign from their jobs — and has been seeking to enforce greater preservation to boost national savings.
Whether accurate or not, it is indisputable that South Africans don’t save enough. Few save for emergencies and household savings are generally to be found in pension and provident funds to which employees are compelled to contribute by employers. That is why the issue of pension withdrawals is such an emotive one: not only do workers rightly see it as their money, but it is also their only money.
A change along these lines came into effect for provident funds on March 1 after much opposition from Cosatu. Whether it will fly this time is hard to know. South Africans of all classes have grown used to being able to access a lump sum when they leave employment so they can use it to build a house or acquire some other asset.
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