Proposed new state pension fund would wreak havoc - but Treasury says it's not govt policy

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The Department of Social Development's Green Paper, proposing a new National Social Security Fund, caught the retirement and investments industry off guard.
The Department of Social Development's Green Paper, proposing a new National Social Security Fund, caught the retirement and investments industry off guard.

A new government proposal that will force all South Africans to pay 12% of their earnings into a state-managed fund, could hit private-sector pension funds hard – with South Africa's biggest pension funds administrator saying that it would immediately cut its membership by 60%.

On Wednesday, the Department of Social Development published its Green Paper on Comprehensive Social Security and Retirement Reform. It contains proposals that seek to enlarge South Africa’s social safety that will provide retirement, death and disability benefits for all workers.

Its proposals will hold severe consequences for the investment industry.

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