Household debt concerning: Gordhan
The level of over-indebtedness of households is concerning, Finance Minister Pravin Gordhan said on Wednesday.
Tabling his 2014/15 budget in the National Assembly, he said government recognised the need to protect and improve the financial well-being 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," he said.
South Africa had made good progress towards achieving the National Development Plan's goal of 90 percent access to financial services by 2030.
Some 79 percent of adult South Africans were using regulated financial services in 2013.
Many more households had access to affordable credit, which was 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," Gordhan said.
Cabinet had therefore approved a number of measures to assist such households 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, Gordhan said there would be further reforms over the period ahead.
Legislation had 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.
Government was consulting, within the[National Economic Development and Labour Council, on measures to cover the six million employed South Africans who did 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 had been reached with the Association of Savings and Investment of SA on a way forward to reduce the level of charges for retirement savings products.
Draft regulatory reforms would be published shortly, Gordhan said.
- Sapa