JOHANNESBURG, Sept 11 (Askume) – South Africans are demanding that 4.1 billion rand ($230 million) be withdrawn from pension funds in the first 10 days after a Sept. 1 reform that will allow fund members to withdraw some of their money before retirement.
The “two-pot” pension policy reform is expected to boost domestic demand in the final months of this year , boosting economic growth due to the widely expected interest rate cut later this month and other factors.
This should also increase government tax revenue.
The South African Revenue Service (SARS) said in a statement on Wednesday that it had received about 160,000 savings withdrawal applications between September 1 and 10.
“The total lump sum amount of applications received was R4.1 billion,” SARS said.
The National Treasury said the reforms were designed to support long-term retirement savings while providing flexibility to fund members who find themselves in financial difficulty.
From September 1, retirement contributions will be divided into a savings part and a retirement part according to the retirement fund. One-third of the total contribution will go to the savings part and two-thirds to the retirement part.
The savings portion can be withdrawn at any time, but the amount must be at least R2,000 and can only be withdrawn once a tax year. Withdrawals will be taxed at your marginal personal tax rate.
The central bank estimates that withdrawals in the fourth quarter of this year could be between R40 billion and R100 billion.
(1 USD = 17.9554 Rand)
