06 Jun 2012
The Minister of Finance announced in the 2012 Budget that a series of technical discussion papers on the promotion of retirement savings will be released this year. These papers will deal with how best to ensure that South Africans have access to appropriate savings vehicles and that they make adequate provision for retirement.
The draft proposals in this overview focus on more urgent reforms to the retirement industry that will complement the longer-term social security reform that government will publish later this year. This overview also builds on the shift to a twin peaks system of regulation that government announced in the 2011 Budget, which will also lead to the establishment separate market conduct and prudential regulators.
Adequate retirement savings require an active public, an engaged government and an industry that is fit for purpose. There are currently a number of challenges within the existing South African retirement structure that negatively impact ordinary South Africans.
Despite the high membership rates for retirement funds and significant accumulated savings, only about 10 per cent of South Africans are able to maintain the same level of consumption they had before they stopped working. This is explained by the low levels of preservation of retirement savings.
The National Treasury will over the next couple of months publish a series of more detailed technical discussion papers on the following matters:
“These are structural changes and a paradigm shift. At the end of day government has one interest and that is to ensure that the beneficiaries of the retirement process benefit substantially from their own savings,” said Finance Minister Pravin Gordhan.
Consultations will be convened with trade unions, employers, retirement funds and the broader public to refine the draft proposals. National Treasury will arrange workshops with stakeholders, and take appropriate steps to inform and engage with the public.
Information provided by GIB Employee Benefits on behalf of the Destiny Umbrella Retirement Funds.