Budget 2021 – Continued engagement on pre-retirement withdrawals from retirement funds

By MoneyMarketing

Earlier, Finance Minister Tito Mboweni said that National Treasury would publish draft amendments to Regulation 28 for public comment this week. The proposed amendments to Regulation 28 seek to make it easier for retirement funds to increase investment in infrastructure.

The National Treasury (NT) notes that the COVID-19 pandemic has influenced many countries to consider allowing individuals to access their retirement savings as an interim relief measure.

“Alongside the 2020 Medium Term Budget Policy Statement, the National Treasury published an explanatory note with financial sector updates that noted numerous requests to allow limited pre-retirement withdrawals from retirement funds under certain conditions, such as disasters,” the Budget documents state.

“Government continues to engage with trade unions, regulators and other stakeholders to discuss how to allow these withdrawals, together with mandatory preservation requirements,” the NT says.

Annuitisation for provident funds takes effect from 1 March 2021 and in addition, the NT has published draft amendments to Regulation 28 of the Pension Funds Act (1956) for public comment.

“The proposed amendments seek to make it easier for retirement funds to increase investment in infrastructure and improve the measurement of infrastructure investment by the FSCA.

“The proposed amendments refer to infrastructure investment already permitted through various asset classes and suggest delinking the asset category related to ‘hedge funds, private equity funds and other assets not referred to in this schedule’. Delinking this asset category will make private equity a separate asset class with a higher investment limit.”