New push to allow South Africans to access their retirement funds during coronavirus lockdown

Trade federation Cosatu has submitted an urgent request to Finance minister Tito Mboweni, to allow workers to access part of their retirement fund savings for coronavirus financial relief.

Cosatu said that other than the ‘very meagre’ TERS benefit, many of its members are not receiving income as they are are not working during the lockdown period.

“We are of the firm view that access to sufficient income during the lockdown period, coupled with the threat of a rapidly spreading Covid-19 pandemic, is critical to the well-being of workers and their families,” Cosatu said.

“We also anticipate that the sectors in which we organise will be detrimentally affected by the current Covid-19 crises which our country and the world finds itself in now.”

The trade federation said it now wishes to explore the possibility of members accessing their retirement fund withdrawal benefits,

“Specifically, we are seeking a facility where our members could, on an urgent and expedited basis and in the immediate period ahead, access a portion of their retirement fund withdrawal benefits, in order to help plug the income gap between what they are entitled to receive from the UIF, and their normal wages/salaries.”

Cosatu said it has been preliminarily advised as follows:

• That pre-retirement access to retirement fund withdrawal benefits is currently mainly legally only possible for purposes of assistance relating to housing;

• That the Financial Sector Conduct Authority (FSCA) does not have the authority and/or powers to waive the provisions as set out in point 1 above, to allow pre-retirement access in the manner that we envisage;

• That it might be possible for the Minister of Finance to intervene on an urgent basis in terms of the provisions of the Disaster Management Act, by issuing an emergency direction in this regard.

“We accept that there might be some practical issues to consider, such as how such pre-retirement emergency withdrawal is treated by our country’s tax regime, as well as the specific amounts involved,” Cosatu said.

“At this stage, we estimate that such emergency pre-retirement withdrawal benefit for emergency Covid-19 relief would be no more than the equivalent of 6 month’s wages or salary.”

However, Cosatu said that that once-off access to withdrawal benefits will not detrimentally affect the medium to long term sustainability of eventual retirement withdrawal benefits.