New Pension Law Proposed for South Africa
The Democratic Alliance (DA) has called for comment on its proposed Private Member’s Bill (PMB) to amend the Pension Funds Act.
The bill aims to amend the current Pension Funds Act to enable pension fund members to access a percentage of their pension fund before retirement as a guarantee for a loan.
This will help alleviate financial pressure during an emergency such as the coronavirus pandemic or any other emergency similar to Covid-19, the party said.
“The unfortunate outbreak of the Covid-19 pandemic in South Africa has dealt a crippling blow to our country’s economy and has left many South African families in financial ruin. A lifeline such as this would save many families,” the DA said.
“By enabling a member to access a pension-backed loan, that member will be able to leverage their pension fund investment before their retirement date, without eroding their provision for eventual retirement.”
The DA said that lending institutions will be enabled to offer loans to pension fund members at competitive interest rates and over extended or deferred payment periods, given that the loan is fully guaranteed.
“The draft bill provides for a registered pension fund to offer a guarantee to a pension fund member of a maximum of 75% of their share in the value of the fund.
“By enabling a member to access a pension-backed loan, that member will be able to leverage their pension fund investment prior to their retirement date, without eroding their provision for eventual retirement.”