South Africans pull R4.1bn from pension funds in 10 days since reform took effect
South Africans asked to withdraw R4.1-billion from their pension funds in the first ten days after a reform took effect on September 1 allowing fund members to make partial withdrawals before retirement, the tax service said.
The "two-pot" pension policy reform is expected to spur domestic demand in the final months of this year, boosting economic growth alongside factors like a widely expected interest rate cut later this month.
It should also lift government tax revenue.
The South African Revenue Service (Sars) said in a statement on Wednesday it had received roughly 160 000 savings withdrawal applications over September 1 to 10.
"Gross amount of the lump sums for the applications received totals R4.1-billion," Sars said.
The reform is meant to support long-term retirement savings while offering flexibility to help fund members in financial distress, according to the National Treasury.
From September 1, retirement contributions will be split by retirement funds into a savings component and a retirement component. A ratio of one-third of total contributions will go into the savings component and two-thirds into the retirement component.
The savings component will be accessible at any time, but withdrawals must be a minimum of R2 000 and only one withdrawal may be made in a tax year. What is withdrawn will be taxed at the individual's marginal tax rate.
The central bank estimates withdrawals could be between R40-billion and R100-billion in the fourth quarter of this year.
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