Be wary of financial advice on your pension
A TREND which resulted in a large number of public servants cashing in their pension funds last year could have been fueled by self-centred financial advisers driven by greed.
Ismail Momoniat, the deputy director-general of National Treasury, said this during an interview at the launch of Savings Month yesterday organised by the SA Savings Institute in Sandton.
“We need to be careful how the message goes out because, sometimes, like they were saying to us, it can be financial advisers who will say ‘the government will take your money and you better cash out’,” said Momoniat.
“What your financial adviser is not telling you is that he or she is going to make money if you cash out and if you keep it there in the pension fund they will not make money,” he said.
“So a lot of people at the level of advisers were clearly playing this game and you get ruthless financial advisers.”
Momoniat said misinformation about pensions would cause chaos.
He said he hoped the pension reform legislation would start being processed soon in Nedlac, and “we have to deliver on the social security paper”.
“Hopefully, soon after the local government elections, we can release that paper and get the discussion going and that has been a huge barrier for some of the participants,” he said.
“But there are other areas like the retirement reforms and we don’t need that paper to have the discussion, but it will help to facilitate the discussion.”
The pension fund reform law, which should have become effective in March, was postponed after opposition from Cosatu.
“A lot of Cosatu’s concerns are legitimate and they were saying working people tend to have shorter life spans and asked if the annuity products are appropriate.
“In a system you can have appropriate products, but we have serious weaknesses in the system,” Momoniat said.
Even if you are a member of a big fund, the moment you retire do not get financial advice on utilising the pension, he said.