Standing Committee on Finance
George Bennett
Two Pot System for Managing Retirement Savings (George.Bennett ) 1st Year Bcom Business Management Student (Incomplete "hoping to secure a sponsor")
5 August 2022 12:21 a.m.
Dear Standing Committee on Finance,

The current reforms suggested to allow early withdrawal of retirement funds offers perhaps temporary relieve to a ongoing crisis of economic stagnation and slower uptake of savings products in South Africa. As it stands little reform has happened with current Financial Service Providers licensed under FSR. The access to jobs that pay in access of $1000 a month is in decline in South Africa as many employers are selecting to exploit the vulnerability of our people.
As it stands the job growth experiences in the last 10 years has specifically come from jobs in the lower tier of the income stream jobs paying less then $500 per month, where many South African's require a wage of at least $900 per month, making it difficult for the state to collect PAYE and therefore having to rely on more aggressive taxation on goods and services for tax revenue collection, knock on effect is consumer inflation increases as the producers pass the increase in tax on to the consumer. In the short more then $3.8 billion dollars +- will be accessible to the public if this law is passed which will not address the current liquidity challenges in our economy , as beneficiaries are likely to pay of their long term debt and retain short term debt like credit cards and other financial tools that allows them residual access to cash. That means this money will go back into the hands of the commercial lenders and not assist our people. Our citizens are in a debt trap and government should encourage lenders like commercial banks to access the Loan Scheme Guarantees to write off the remaining debt in amnesty programs for example if your debt is in access of R150 -R400 K the amnesty program should allow for 40% of the total debt to be written off that means if your total debt is R300 K or more you should receive debt amnesty for the amount of R120000 which will bring great immediate relieve to citizens. That will bring your remaining debt to R180000 which over manageable terms can be restructured into affordable payments of less then 3% premium ,the state should place a moratorium of interest rates that can be applied for loans and credit products where interest charged on principal cannot exceed 6%
This will allow many citizens the opportunity to manage their debt and encourage them to save and invest .The current debt to income ratio for more then 70% of the population is at 160% which means many citizen's are relying on credit products to survive.