The Public Servants Association (PSA), representing more than 220 000 public servants warns public servants not to mislead by rumours that the Government's proposed retirement reforms will impact negatively on their pensions.

The purpose of Government's proposed retirement reforms is to align the benefits of provident funds to those of pension and retirement annuity funds. The proposed retirement reforms, including those relating to preservation of savings, are aimed at ensuring that pension fund members are better protected and can retire comfortably.

"The main aim of pension or provident funds is to provide benefits for its members when they retire from employment. The fund also usually pays benefits when a member dies while still in service or is unable to work owing to illness or retrenched," said Manie De Clercq, PSA Deputy General Manager: Members' Affairs.

The main difference between a pension fund and a provident fund is that if a pension fund member retires, the member gets one third of the total benefit in a cash lump sum and the other two-thirds is paid out in the form of a pension over the rest of the member's life. A provident fund member can get the full benefit paid out in a cash lump sum.

"After implementation of the proposed reforms, provident funds should make provision for a cash lump sum with an annuity part and not only for a cash lump sum as currently. Public servants belong to pension and retirement annuity funds, i.e. the Government Employees Pension Fund (GEPF) or other Government-related pension funds. Members of these funds are assured that the reforms will not affect them upon retiring. When a member changes jobs, pre-retirement accumulated balances will also not be affected and can be withdrawn as per current rules," explained De Clercq.

"The PSA is extremely concerned about public servants who, based on these unfounded rumours, are being misled by so-called financial advisors into resigning to ‘safe-guard' their money without due consideration of the impact of this decision on their future financial security," said De Clercq.

Issued by PSA