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Government's proposed retirement reforms

28 July 2014, 18:00

A press statement issued by National Treasury on the 09th July 2014, pertaining to proposed retirement reforms which treasury envisages to make with reference to pension fund contributions of civil servants has reference.

Treasury in the notice categorically state that the reforms is not aimed or proposing that people’s current and new retirement savings be kept, saved or preserved with Government (construed as “nationalization”) or be used to fund Government projects (referred to as “prescribed assets”).

Be it as it may, but what is clear is that there is an agenda attached to the proposals which treasury at this point in time want to euthanize as ‘an encouragement’ to civil servants not to cash in on their pension contributions at the time when they resigned from civil service. But to rather allow treasury to manage the accumulated funds until such time that they reach retirement age, at which point they would enjoy the benefit of the savings in the form of a pension payment monthly.

As has been evident in a number of instances over the past 20 years of democracy under the ruling government, funds, (i.e. Transnet’s pension fund missing R 76.2 billion) seem to mysteriously disappear and or are being mismanaged by the trustees of the designated funds, yet government and or treasury now through this notice seem to want to calm fear that contributions would not be nationalized and or used to fund government projects.

Contribution made to a pension and or provident fund was direct contributions that were made by the respective employee and such employee should have access to the accumulated funds and also have a say in its management for the ultimate benefit of his retirement.

Treasury and or government now appears to want to decide on behalf of employees as to what to happen to their accumulated pension contributions if and when the person resigns from civil service, yet the Constitution of the country, clearly awards each citizen of this country ‘freedom of choice’ yet in this instance this right is being infringed in that government and or treasury now seem to assign then the right to decide on the rights of an individual.

Members would have no say in the manner in which their contributions are being managed, and or whether it is indeed managed to attain optimum results. The treasury and or trustees of the money would have access and or be able to use the accumulated funds as security in its debt ridden situation that currently prevails, in that in 2002 the liability in the form of foreign loans was R 200 billion, yet as it stands at the moment the foreign debt is estimated at R 1 200 trillion which in 2015/16 would reach R 2 000 trillion.

Debt usually requires some kind of collateral security and what better way for treasury and or government to utilize the accumulated funds in the government pension fund to act as collateral security for its debt ridden situation.

Members to the pension fund should remain to be in control of the funds and treasury and or government should allow members to withdraw the funds as and when they wish to do so, and then to invest the funds on ‘paid up retirement annuities’ which the private sector would managed at the best possible return on investment on behalf of the individual.

To encourage savings by means of the proposed retirement reforms, can be considered as a good idea, based on historical information and or the tendency amongst people not to save, but then a better option would be to allow all members that have contributed to the pension fund, to withdraw their funds, and deposit it into a paid up annuity which they know would provide them with better returns and provide the necessary security that it would not ‘mysteriously disappear’

As members, each and everyone has a Constitutional right and that right can and may not be infringed.

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