Following the release of National Treasury’s second discussion paper on retirement reform in February 2007 and other research studies released by the Department of Social Development in September 2007, Government promised to provide a collective view on retirement and social security reform by the end of 2008.
This collective discussion document has been delayed due to the different views on the significant issues being debated. Considering the timing of the elections in early 2009, it is likely that a collective view will be delayed until after the elections and once a new Cabinet has been appointed and settled. Any Government view of such an important reform will also be up for further discussion with stakeholders as well as at Nedlac.
Planning for the changing environmentFinancial services companies and financial advisers should already be planning for the changing environment and thinking what changes the reform could bring to their business mix and models.
Pension Fund Members should be advised not to panic and to preserve their retirement savings. Any legislative change regarding pensions will be widely consulted and will take quite some time to pass through the Parliamentary legislative process.
A period of transition will also be necessary to fully phase in the reforms over a number of years. Proposed changes will be widely communicated to all stakeholders beforehand and a significant challenge for Government and regulators will be to communicate the changes effectively to ordinary members of the public.
The ultimate goal of the reform is to improve pensions provision for members, enabling them to retire in a better financial position. Integration across the various “pillars” of social security and pensions provision is an important step in this regard, and the reform seeks to do exactly that.
I suspect Goverment is looking at nationalizing the private pension fund arena and this should be resisted at all costs.
