Dr Dion George, MP intends to introduce the Pension Funds Amendment draft Bill, 2020 in Parliament.
Section 19 of the Pension Funds Act, 1956 (Act No. 24 of 1956) (“the Act”) currently enables pension fund members to access a loan, where the pension fund asset acts as security for such a loan, in order to obtain a home loan. However, the Act does not permit pension fund members to obtain a loan for any other purpose. The draft Bill therefore seeks to amend the Act in order to allow for pension fund members to obtain a loan, secured by a guarantee from a registered pension fund.
Interested parties and institutions are invited to submit written representations on the proposed content of the draft Bill.
417 participants (closed 17 October)
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SUMMARY
The draft Bill seeks to amend the Act in order to allow for pension fund members;
- to obtain a loan, secured by a guarantee from a registered pension fund,
- to alleviate financial pressure during the COVID-19 emergency or any other emergency similar to COVID-19.
- The draft Bill provides for a registered pension fund to offer a guarantee to a pension fund member of a maximum of 75% of their share in the value of the fund.
- By enabling a member to access a pension-backed loan, that member will be able to leverage their pension fund investment prior to their retirement date, without eroding their provision for eventual retirement.
- Lending institutions will be enabled to offer loans to pension fund members at competitive interest rates and over extended or deferred payment periods given that the loan is fully guaranteed.
IN THE MEDIA
- Business Tech – New pension law proposed for South Africa
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