Today's Labour News

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daBusinessLive reports that citing the high level of indebtedness and low level of savings in the country, the Treasury has rejected a bill proposed by the Democratic Alliance (DA) that would allow pension fund members to leverage their pensions for their own benefit.

The Pension Funds Amendment Bill proposed by DA MP Dion George would allow pension fund members to take out loans using their pensions as security. But Treasury deputy director-general (DG) Ismail Momoniat said on Tuesday that the department had concerns around the bill inviting more problems. “The biggest problem is that South Africans don’t save enough and are highly indebted,” he pointed out, adding that while retirement savings were meant for retirement, pension fund members did not preserve their funds and cashed out their savings when they resigned. “While we think that there is a role for some limited withdrawals, the bigger issue is to get preservation so people don’t cash out each time they change their jobs, to close that loophole,” Momoniat said, adding there had been a lot of abuse on the borrowing side for those funds that allowed it. Currently under the Pensions Fund Act, pension funds are allowed to offer members the possibility of leveraging their pension funds for loans to purchase a home or to improve it. George said his amendment was needed as, amid the Covid-19 pandemic, workers were resigning from their jobs to access their pensions as the only solution to their financial hardship.

  • Read the full original of the report in the above regard by Linda Ensor at BusinessLive

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