The National Treasury recently published the media statement, Process and approach to preservation and access to retirement savings, which provides details on the approach and planned timelines concerning the proposal to allow for greater preservation with limited pre-retirement withdrawals from retirement funds.
The Minister of Finance noted in the 2020 Medium Term Budget Policy Statement (MTBPS), as well as in the 2021 Budget that consideration is being given to allow for limited pre-retirement withdrawals from retirement funds under certain conditions, with the provision that this is accompanied by mandatory preservation upon an employee’s resignation. The government has been engaging with trade unions, retirement funds, regulators and other stakeholders on how to allow limited withdrawals, increase savings and improve preservation, without creating liquidity and investment risks.
It is expected that any changes for a new withdrawal mechanism would only become effective next year (2022) at the earliest, as legislative and fund-rule amendments would be required, with the possibility that some of the medium-term provisions take longer to take effect.
Announcements and the public release of the proposed measures for public comment and consideration will be made before or at the 2021 MTBPS.