BPOPF warms up to emergency pension fund withdrawals
Pauline Dikuelo | Monday March 14, 2022 06:00
At present, pension fund members can only receive their benefits when they reach retirement age and begin drawing the monthly payouts. However, with the squeeze on disposable incomes, including loss of properties and mounting medical bills, legislators have been pressing for the upcoming changes in the retirement act to allow terms under which members could tap into their retirement savings for emergencies.
The Finance and Economic Development ministry is finalising amendments to the Retirement Funds Act to allow pension fund members who have not yet started earning a monthly annuity to get loans from their funds under specific conditions or to use part of the accrued pension as security.
The BPOPF had previously expressed reservations about the proposed changes, saying pension funds were integral to members’ post-retirement financial stability.
This week, pension fund principal officer, Moemedi Malindah said the proposed changes, with the planned limitations, could be of benefit to financially stressed pension fund members.
“As a retirement fund we believe that the spirit of such amendments will be beneficial to the members and will help them to improve their welfare including the provision of housing and other essentials,” he said.
Finance minister, Peggy Serame recently told Parliament that the ministry had sent back a draft of the amendments for finalisation by the Attorney General’s office. The issue of allowing pension fund members to withdraw part of their benefits came up several times during legislators’ responses to the 2022 Budget Speech.
“We want to have some withdrawal clauses so that when someone has a challenge like health or when their house is about to be taken away, they can take some of that money,” she said. “But please hear me clearly: this is not about taking all the money. “I must stress that we are not coming up with a law where someone can go and take all of their pension. “I would be irresponsible to do that or allow that because we must remember what a pension is for. “It is so that when someone has left their job, they can be provided for.”
Serame added: “We recognise that with our existing law, it’s difficult that it could help someone who is in trouble like the times that we are coming from with the pandemic. “It would be tough for someone to pay for their property so that it is not taken away or for them to get health services. “As much as we will make things easier, it will not be bulela ditswe (free for all). “We will continue protecting Batswana so that when they retire, they will have something to help them after that.”
Meanwhile, the BPOPF says it is yet to invest its P3 billion allocation for local infrastructure as it has not been successful in contracting an infrastructure fund manager for the funds.
“This is because the asset class is much specialised and there are no readily available local infrastructure fund managers,” Malindah said. “The fund has thus embarked on an incubation project for local infrastructure, which is still ongoing. “It is expected that such a move will help contribute to the development of this asset class in the country.”
With assets of over P80 billion, the BPOPF is the country’s single largest pension fund. However, it has been criticised for failing to meaningfully invest in local infrastructure, especially at a time when government’s resources are stretched by COVID-19.
The BPOPF has previously invested in infrastructure outside Botswana, placing $10 million with the Pan African Development Infrastructure Fund in South Africa in 2014. However, the P3 billion allocation will be the first to target local opportunities.