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National Treasury has advised the public against contacting their retirement funds in attempt to request a partial withdrawal of pension funds in 2021 as the law does not currently allow this.
On Wednesday, Treasury said that the partial withdrawal or retirement funds is not happening now as legal processes need to be followed first.
It said that further announcement on the proposed measures for comment and consideration will be made during the medium term budget policy statement.
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“Any legislative changes to pension fund withdrawal would first require a comprehensive public consultation process, changes to fund rules and period of preparation by fund administration,” reads a statement from Treasury.
“Retirement funds are primarily designed to encourage individuals to save while working to finance consumption later during retirement.”
It said that the redesigning of the retirement system to allow for limited withdrawals with mandatory preservation was complex and requires thorough consultations.
“Government has been working on a more structured two-bucket system that will enable the restructuring of future contributions. One bucket is to be preserved until retirement, and the second bucket will allow for pre-retirement access during emergencies or extra-ordinary circumstances.”
It said that any changes to the law would only become effective next year at the earliest, and some of the medium-term provisions may take even longer to take effect.
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“The government remains committed to encouraging South Africans to save more, both for their retirement and for shorter periods before retirement,” reads the statement.
It explained that: “The government has been engaging with trade unions, retirement funds, regulators and other stakeholders to discuss how to increase savings and improve preservation and allow limited withdrawals, without creating liquidity and investment risks.”