Democratic Alliance, South Africa's opposition political party, has proposed an amendment to the country's retirement legislation to help citizens secure hardship loans amid the coronavirus pandemic.
DA wants to allow participants to use their registered defined benefit funds to secure emergency loans from banks, under the proposed Pension Funds Amendment Bill 2020. The change would be made to the existing Pension Funds Act, which allows plan participants to use their retirement assets as security to guarantee home-related loans only.
Up to 75% of the value of the pension fund can be used to guarantee the loan, the proposal said. The proposal is aimed at helping citizens withstand the impact of the COVID-19 pandemic on the South African economy.
Lending institutions such as banks are expected to offer loans to pension fund participants at competitive interest rates and over extended or deferred payment periods, the proposal said.