Want access to a portion of your retirement fund without retiring?

Currently, there are only three ways South Africans can access money from their retirement funds before retirement: you can cash it out under very strict circumstances, such as when you change jobs and your money goes into a preservation fund, but you get taxed heavily for it; if you emigrate, which allows access to money in a retirement annuity, or if you decide to use your retirement fund to underwrite a home loan.

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The Democratic Alliance's proposal is aimed at allowing South Africans to have more control over their own retirement funds, especially for use in emergencies such as the COVID-19 pandemic.

The proposal reads: 

• 'A registered fund may, if its rules so permit and subject to prudential standards, furnish a guarantee in favour of a person other than the fund in respect of a loan granted or to be granted by such other person to a member, which guarantee may not exceed 75 per cent of that member’s share in the value of the fund.'

This would mean that South Africans would have access to at most, 75% of their funds to use however they see fit through loans that can be offered by various institutions. 

The proposal itself isn't new but it has recently found its way into the spotlight after the Parliament’s Standing Committee on Finance invited interested parties to submit written submissions on the Pensions Funds Amendment Bill, according to Business Tech. 

If you're wondering how this would work, read below:

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