2 minute read
5 Sep 2014
8:25 am

Finance minister moves to calm pension concerns

Finance Minister Nhlanhla Nene on Thursday moved to scotch rumours government is planning to nationalise pension funds, amid reports that some employees are resigning their jobs to access their money.

FILE PICTURE: Former Finance Minister Nhlanhla Nene. Picture: GCIS

“Recent anecdotal evidence suggests some employees are resigning from their jobs to cash in their pension and provident funds,” he told MPs in the National Assembly.

In a specially scheduled debate on the matter, Nene called for calm, and stressed that government had no intention of nationalising pension funds, or of preventing employees from accessing their money.

“Government respects the fact that these retirement funds belong to their members. Government has never had, and does not have, any intention to nationalise these funds.

“Rumours to this effect are a blatant lie. And so are the rumours that government has changed the laws on the preservation [of funds] before retirement.”

While government would like to see members preserve their retirement funds until they retired, it had not changed the law to force members to do so.

“Employees still have the right to cash their pension and provident funds when they resign their jobs.”

Nene did not put a figure on the number of employees who, fearing government is set to clamp down, have resigned to access their pension money.

“We are not sure at this stage how widespread this phenomenon is.”

His assurances follow similar ones issued by Cabinet last month, and by National Treasury in July, that pension and provident funds are safe and there is no need for employees to resign to cash them in.

Nene told the House that if government were to change pensions laws, such changes would always recognise vested rights.

“We would not, underline not, change any such laws and rules retrospectively,” he vowed.

Rumours to the contrary were false.

Turning to the Government Employees Pension Fund (GEPF), he said resignations from the fund were concerning.

“Government is extremely concerned that members of the Government Employees Pension Fund are also reportedly resigning from their jobs, even though there is no change at all to the GEPF and its laws.

“Teachers, health workers, and members of our police service have no need to resign their jobs to cash in their pension funds. Their pensions are safe and their assets to their pension funds are also safe, and no law has been changed in this regard.”

Nene suggested an underlying reason for the reported spate of resignations might have to do with high levels of indebtedness across South African households.

The household savings rate hit a low 1.7 percent of GDP last year.

Nene appealed for calm among pension and provident fund members.

“Workers’ retirement savings are safe… there is no reason for workers to panic and prematurely resign to access their retirement savings. This money will always belong to them.

“We appeal to everyone to be calm and not make misguided decisions based on wrong and misleading information,” he said.