Budget Speech 2014

Mister Speaker, this administration has recognised the need to protect and improve the financial wellbeing of households, to make them less vulnerable to a sudden loss of income in bad times. We recognise that households must be encouraged to invest in their future, including investment in homes or productive assets, and saving for retirement or business purposes.

South Africa has made good progress towards achieving the NDP’s goal of 90 per cent access to financial services by 2030. Some 79 per cent of adult South Africans were using regulated financial services in 2013.

Many more households have access to affordable credit, which is of great benefit when used productively, but bad when used to fund excessive consumption.

Government is concerned about the level of over-indebtedness of households. Cabinet has therefore approved a number of measures to assist such households to reduce their debt burden, and to stamp out abusive and fraudulent activities of reckless lenders and unscrupulous debt collectors. Working jointly with the Ministers of Trade and Industry and Justice, we will shortly commence actions against abusive and unsustainable practices.

With regard to retirement, there will be further reforms over the period ahead. Legislation has already been passed by Parliament to improve governance over pension and provident funds, and to align the rules and tax treatment of pension and provident funds, while at the same time protecting vested rights.

We still seek improved coverage and preservation of retirement funds, and lower costs in the system. We are currently consulting within NEDLAC on measures to cover the 6 million employed South Africans who do not enjoy access to an employer-sponsored retirement plan. We intend to move progressively towards a mandatory system of retirement for all employed workers.

Agreement has been reached with the Association of Savings and Investment of South Africa on a way forward to reduce the level of charges for retirement savings products. Draft regulatory reforms will be published shortly.