The Government Employees Pension Fund has warned of a temporary liquidity crisis if there are large-scale resignations involving public servants wanting to cash out their pension funds.that if public servants resign en masse it could lead to cash constraints on any fund and carry the secondary effect of a negative shock on asset prices at the dates of withdrawal.
Under the new Draft Revenue Laws Amendment Bill, the Treasury envisages a ‘two-pot’ system under which members would be allowed to access up to a third of their net retirement fund contributions and accrue investment returns on an annual basis to provide short-term financial relief. “It makes it possible for workers not to resign from their employment merely to access their retirement funds and would have assisted members during a crisis like the Covid-19 pandemic, when many employees faced reduced salaries or were not paid at all during that time,” National Treasury said.
Sanlam’s latest benchmark survey of South Africa’s retirement industry showed that 56% of consumers said they do not agree with the proposed system.
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