RE­TIRE­MENT RE­FORM DE­LAYED

The losers are the or­di­nary peo­ple, says Maya Fisher-French

CityPress - - Business -

The an­nounce­ment last week that re­tire­ment re­form pro­pos­als have been post­poned sends a very poor mes­sage about the gov­ern­ment’s abil­ity to im­ple­ment much-needed re­form. As well as this, fi­nan­cial in­sti­tu­tions have wasted sig­nif­i­cant amounts of money im­ple­ment­ing sys­tems to ac­com­mo­date th­ese changes.

What is sad is that the de­lays are largely a re­sult of ru­mour and mis­in­for­ma­tion cir­cu­lated by po­lit­i­cally mo­ti­vated par­ties. The losers are the or­di­nary men and women who have re­signed from their jobs be­cause of the scare tac­tics, along with the peo­ple who will not ben­e­fit from im­por­tant im­prove­ments in the re­tire­ment in­dus­try.

Be­fore this de­lay, the rules of prov­i­dent and pen­sion funds were to be aligned. This meant that peo­ple could trans­fer their money from a pen­sion fund to a prov­i­dent fund or vice versa when they changed em­ploy­ers. They would then have had a sim­ple, cost­ef­fec­tive way to pre­serve their re­tire­ment funds.

Peo­ple pay­ing ad­min­is­tra­tive fees on sev­eral prov­i­dent and pen­sion preser­va­tion funds would have been able to con­sol­i­date th­ese into a sin­gle fund and save money.

Those peo­ple closer to re­tire­ment – who were wor­ried about not hav­ing enough re­tire­ment money – would have been able to in­crease their con­tri­bu­tions to 27.5% of their salary tax-free. All this has now been de­layed for at least another year, if not two.

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