01 Nov 2022

All withdrawals from pension funds are now governed by the newly introduced Retirement Funds Act.

This followed the enactment of the new act, which among others allows members up to 50 per cent withdrawals from pension savings, as opposed to one third prescribed by the old act.

Insurance and Pension director, Ms Patrinah Masalela explained this Monday during a media briefing on the commencement of the Retirement Funds Act of 2022 .

The new act allowed deferred members or members who no longer contributed to the fund but had preserved their pension rights, to withdraw their pensions to clear their existing loans, including mortgage loans, she said. She added that the deferred members would also be allowed up to 50 per cent of their savings to pay for medical expenses.

 Despite the changes, Ms Masalela cautioned members against depleting their pensions, adding that members were advised not to go for maximum limits when making a request to withdraw.

She said pension was meant to assist members to live a dignified life after retirement and the new changes were not intended to defeat the purpose.

The new changes however she said did not have any bearing on the active members or those currently employed and contributing towards their pension as well as pensioners.

Ms Masalela said the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) was currently conducting a study to review the effect and impact on the pension systems, should pensioners and active members be allowed to withdraw.

 She said the study findings would inform how the two groups could be assisted.

The NBFIRA acting director Retirement Fund, Mr Phineas Sesinyi said pension savings were meant to sustain someone during old age, hence there was a need for members to leave enough money for life after retirement.

He said the new provisions only allowed members to withdraw to avoid dire situations such as loss of property, debts and medical expenses.

Mr Sesinyi said for a member to withdraw from the fund, such member should had been unemployed for at least six consecutive months and have no alternative.

“Pension should be the last resort and the board of trustees must be satisfied,” he said.

 However, he said members could only be assisted if the loan amount was lesser that the saved money from pension Fund.

 Furthermore, Mr Sesinyi said NBFIRA was already in conversation with various pension funds to start assisting members as per the new act.

Further, he said they had encouraged pension fund administrators to raise awareness on the changes brought by the new act. The Retirement Funds Act changes affect all pensions in the country, he said.  ENDS