National Treasury are clamping down on ravaging your retirement savings during pre-retirement. By tweaking their proposal regarding how much access you have to your retirement savings, hopefully more people will be have some financial stability when they retire.
Treasury are in favour (after legislation is introduced) of citizens to not be allowed to exceed one withdrawal per year from your retirement savings and not exceeding more than ten percent of your fund, per withdrawal.
In addition, National Treasury is also considering amending the process of the taxing of pre-retirement withdrawals, in a bid to promote fairness and deter withdrawals for frivolous reasons.
Treasury released a retirement reform document that mentioned it will release draft regulations by May – stipulating that retirement funds provide various default investment options before and after retirement. Some of the options to be included are default annuities at retirement and default investment portfolios (if you do not direct your fund in which portfolio to invest your savings).
According to Treasury, the annuity and product provider at retirement that you select has a direct impact on your financial security. Hence the aid of financial counsellors (who may not receive commission) may be required to guide you through the default annuity options and any other options you may consider.