Africa: Plan to Encourage Retirement Savings
The government plans to make South Africans save more for their retirement years.
Proposals are being made to the National Economic Development and Labour Council to compel income earners to keep a portion of their salaries in pension funds while they are working. But trade unions have voiced support for the status quo on the grounds that many workers used provident funds.
But Finance Minister Pravin Gordhan yesterday said provident funds could be abused as they allowed people to withdraw money before they retired . Pension funds, on the other hand, kept some money away while people were working .
Speaking in Pretoria at an employment creation summit between the government and organised labour, Mr Gordhan said by reforming the retirement industry, South Africans could save more and the country would then be less dependent on funds from overseas.
"SA at the moment doesn’t save enough. It relies on foreign savings to come into SA for purposes of investment in SA," he said .
National Council of Trade Unions president Joseph Maqhekeni said he had heard there were plans to replace provident funds with pension funds. This prompted Mr Gordhan to clarify the matter, saying proposals to enforce mandatory retirement savings measures were being discussed, but no policy steps had been taken yet.
"Nothing is going to happen immediately, no steps are going to be taken in relation to provident funds. Whatever we want to do is in the interests of South Africans, so that they have some money saved for their retirement ultimately, and we also want to build a new retirement system in SA," the minister said.