The South African Reserve Bank governor, Lesetja Kganyago says workers will continue to feel the inflation pressure if they use their withdrawals from the two-pot retirement system for spending rather than to service debt.Kganyago says most businesses and households are feeling the pressure of inflation because they are highly indebted.
“If households use the withdrawals to repay their debt, then you will not have an inflation problem. However, if we go on a spending binge we will have an inflation problem. And part of the reason why you will have an inflation problem is that people are dipping into these savings and instead of the savings being deployed into investment or debt reduction they are then spent on consumption. That could be a problem.
Labour unions have warned that the system will not give workers the financial relief they need. General Secretary of Saftu, Zwelinzima Vavi said the scheme is actually a scam. “This is a statement to mislead workers. This is government typically giving on one hand and taking on one hand,” Vavi adds. Both the Pension Funds Amendment Act and the Revenue Law Amendment Act make provision for pension fund members to access a portion of their funds before retirement.
The legislation has created a savings pot to access a third of their funds while two-thirds will be kept in the second pot for retirement. Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
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Source: SABC News Online - 🏆 32. / 51 Read more »