In light of President Ramaphosa’s assent to the Pension Funds Amendment Bill yesterday, we are re-sending this Update from late last year that takes a closer look at the impending changes to South Africa’s pension system and what they might mean for the economy.
The most immediate impact of South Africa’s pension reform, due in September 2024, is that contributors will be allowed early access to some of their retirement savings, which could provide a near-term lift to consumption. Similar measures introduced in Chile helped to supercharge its post-pandemic recovery. But we doubt the same would happen in South Africa. Over the long-run, if the reform is successful in its aim of raising retirement savings, the government’s fiscal position, overall investment and potential growth could all see improvements.
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