NBFIRA Consult on Allowing Pension Fund Withdrawals :: Mmegi Online

This decision comes at a time when the Ministry of Finance and Economic Development is finalizing amendments to the law on pension funds which could allow members of pension funds who have not yet started to receive a monthly pension to obtain loans from their funds under specific conditions or to use part of the accrued pension as collateral.

Finance Minister Peggy Serame recently told parliamentarians that draft amendments had been referred to the attorney general’s office and would soon be brought back to the National Assembly.

This week, NBFIRA, which is the pension fund regulator, issued a request for proposals on this.

The tender is entitled: “Service contract for the engagement of a consultant/consultants to assess the scope of the liberalization of the legal framework to allow more retirement savings withdrawals and the implications on pension funds and members of registered funds.

Bids for the tender will close on April 22, the regulator said.

The possibility of allowing pension fund members to withdraw some of their savings in an emergency has sparked debate recently, with proponents saying changes to the law are needed given the financial burden posed by COVID-19 .

However, other economic commentators have warned that any relaxation of the statutes could render the safety net provided by pension funds useless and thus deprive members of financial security when they retire.

The Botswana Public Officers Pensions Fund (BPOPF), which had previously expressed reservations about the proposed changes, recently announced that it was open to amendments indicating that with the limitations provided, this decision could be beneficial for members of the pension fund. pension in financial difficulty.

For his part, Serame said any change would be carefully balanced with the obligation to ensure the financial security of pension fund members.

“We recognize that with our existing law, it is difficult for it to be able to help someone who has problems like in the times we are coming from with the pandemic,” she told lawmakers. “It would be difficult for someone to pay for their property not to be taken away or to get health services.”

Serame however added: “Please hear me clearly: this is not about taking all the money. “I have to point out that we are not proposing a law where someone can go and take their entire pension. “I would be irresponsible to do that or allow that because we have to remember what a pension is for. “It’s so that when someone quits their job, they can be supported.”

Pension funds, whose assets are typically tied to long-term investments, including less liquid types such as real estate, would closely monitor the latest developments to assess the impact on their investment strategies.

The NBFIRA study should focus on the impact of any proposed changes and estimate the scale of withdrawals that could be allowed without affecting long-term returns for retirees.

Dolores W. Simon