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Pension e-mail causes panic

By unknown | May 06, 2008 | COMMENTS [ 0 ]

Pension experts and other stakeholders have warned against a malicious e-mail that is causing anxiety and has sent shock waves through the pension fund industry.

Pension experts and other stakeholders have warned against a malicious e-mail that is causing anxiety and has sent shock waves through the pension fund industry.

The e-mail, described by industry experts as ill-informed and irresponsible, claims that the state is intent on stealing people's pensions with its proposed overhaul of the retirement fund industry, which will take effect in 2010.

The e-mail, titled Pension After 2010, reads as follows:

"After 2010 you will not be able to take your pension money out, ever. You will get a pension from the government for the rest of your life ...

"If you die the money goes to the government... So if you worked your whole life and want your pension money, you can forget about it..."

Brent Wilson, editor at ITI news, says the writer of the e-mail had misinterpreted a single paragraph of the Argus' article, which was written by personal finance guru Bruce Cameron in February 2007.

Cameron's article, "How New Pension Will Affect You" reads:

"You will no longer be allowed to cash in your retirement savings if you resign, are fired or retrenched from your job when the new system is implemented.

"The current ability to take your money as a lump sum before retirement is seen as the single biggest reason why most South Africans retire in poverty."

Cameron said in response to the e-mail: "A big lie is riding on the back of a sound national pension plan. This misinterpretation of what I wrote is pathetic.

"What is worse is, it is being used to scare people into resigning from their jobs before 2010.

"The implication of this disinformation is that the government is planning to steal the nation's retirement savings."

Wilson said the e-mail revealed a profound paranoia and is completely unjustified when you take into account the measured approach by the state towards pension fund reforms.

He said the e-mail was irresponsible in that it spread disinformation that resulted in reports of people resigning from funds because of this.

Old Mutual has also issued a stern response, urging people not to panic over proposed reforms to the pension system.

David O'Brien, who heads Old Mutual's retirement fund reform team, said: "These e-mails are causing unnecessary panic among consumers.

"Some of the specific objectives of the proposed overhaul of the pension system is to encourage more people to make provision for their retirement so that they are not dependent on the state," he said.

O'Brien said the proposed reforms are aimed at reducing the costs of retirement savings, so that more money is channelled into actual retirement savings.

It is also aimed at improving the governance of retirement savings in order to minimise risks for the members.

He said the reforms also sought to address other shortfalls in the system, such as raising national savings, aiding economic growth and reducing poverty in old age.

O'Brien said: "Probably the greatest threat to national savings is, in fact, our conspicuous consumption and lack of saving that fuel our present national account woes and makes us vulnerable as a nation to a credit crunch brought on by global market upheavals."

He said that for people to resign from their jobs to access their accumulated retirement savings for fear of the proposed reforms is unnecessary and a rash decision.

"One of the chief reasons that South Africans have inadequate savings at retirement is that they do not preserve their retirement savings when changing jobs."

It is estimated that only six percent of South Africans can maintain their standard of living when they retire.

O'Brien said that it is crucial that people continue saving for retirement.

"There is no sense in delaying savings in anticipation of the new legislation. This is particularly true for people who currently do not have a retirement-savings plan," O'Brien said.

He said that that he could emphasise enough how important it is for South Africans to consult with an accredited financial adviser on a regular basis, to ensure that they are making sufficient provision for their retirement, and other financial needs.


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