Democratic Alliance (DA) Member of Parliament Dr Dion George says some commentators and the National Treasury are making a fundamental mistake about the proposals he’s making to the Pension Fund Amendment Bill.
Last year, Dr George submitted a Private Member’s Bill to Parliament seeking to allow members who contribute to pensions to be given an opportunity of leverage on their benefits. He says he’s not proposing withdrawals of pension but that pensions be used as surety for loans.
The Standing Committee on Finance received legal advice on the Pension Fund Amendment Bill. It has received mixed reactions from various Stakeholders.
Critics of the amendments say this will lead to depletion of resources and beneficiaries will be left with close to nothing when they retire. Among those who support it, are Labour Federations COSATU and FEDUSA. However, COSATU says the Bill requires amendments to address certain weaknesses and further enhancements.
“There is sympathy towards providing relief to those members of pension funds who are temporary without income or are having serious financial difficulties as a result of COVID-19 pandemic or any other emergency related or similar to COVID-19 emergency. Many of the statements made in the memorandum on the object of the bill are not valid and they need to be supported by hard evidence therefore they reject the bill.” Parliamentary legal advisor Noluthando Ntlokwana elaborates.
DA MP Dr Dion George, who submitted the Bill to Parliament, says he’s not proposing withdrawals of pension but that pensions be used as surety for loans. He says those who think that the Pension Fund will collapse due to withdrawals are getting it wrong because pension funds will not dish out loans.
“So to equate the loan that comes out the fund will wobble the whole system is technically wrong and I’m shocked that is what treasury thinks is how it works. It doesn’t work like that – that’s how home loans work. So there is a huge difference. That is why I never proposed withdrawals because if you say borrow the money from the fund, they’re going to withdraw money out of the fund, out of the market and give it to you. It’s different to what I’m proposing” DA MP Dr Dion George said.
The National Treasury says it is expecting to table a bill in Parliament on this matter during the Medium Term Budget Policy Statement. Deputy Director-General for Tax and Financial Sector Policy, Ismail Momoniat says their proposal is a two-post system, one that allows for limited withdrawals and no withdrawals all on the other. However, he says there needs to be a restructuring of the tax system.
“If it’s going to be allowed, it’s going be very limited and it’s going to be conditional on circumstances so that there is no flood, “Deputy Director-General for Tax and Financial Sector Policy, Ismail Momoniat says.
The National Treasury added that the DA’s Bill has no numbers and facts but based on opinions.
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