S.African insurer Momentum 'worried' by number of older workers making pension pot withdrawals (updated)

Momentum AB

27/09/2024 15:44

(Recasts with CEO on new partial pension payout system)
    By Sfundo  Parakozov
       JOHANNESBURG, Sept 27 (Reuters) - South African insurer
Momentum Group  MTMJ.J  expressed concern on Friday over the
number of older people seeking to make partial withdrawals from
their pension funds before retirement under the newly introduced
"two-pot" system.
    From Sept. 1, South African retirement contributions have
been split into a savings component and a retirement component.
A ratio of one-third of total contributions will go into the
savings component and two-thirds into the retirement component.
    The savings component will be accessible at any time, in a
bid by the authorities to provide financial relief to citizens
who have been grappling with the impact of interest rate hikes
and inflation.
        Applications worth 4.1 billion rand ($230 million) were
received within 10 days of the system taking effect, according
to the country's revenue service.
    Momentum, one of South Africa's leading insurance companies,
said it received requests to withdraw a total of 2.5 billion
rand from 150,000 applicants by Sept.25.
        Momentum Chief Executive Jeanette Marais said while 80%
of the applicants are between 30 and 49 years old, there was
concern over requests from the 50-59 age group, which made up
16% of the total.
    "It's worrying that individuals who are so close to
retirement are withdrawing from the savings pot, as they might
not have enough time to make up for the shortfall," Marais said
during a results call.
    She said there was a clear indication that many South
Africans are in a desperate financial state as "98% of people
asked to withdraw the maximum amount that they could get." 
    Earlier on Friday, Momentum reported a 39% rise in full-year
profit, with headline earnings per share (HEPS) up 298.6 cents
in the year to June. 30, from 215.5 cents a year earlier.
    The insurer said higher investment income in an elevated
interest rate environment had driven income.
    It declared a final dividend of 65 cents per share, taking
the total payout for the year to 125 cents per share.
    

($1 = 17.1202 rand)

 (Reporting by Sfundo Parakozov; editing by Nelson Banya, Toby
Chopra and Susan Fenton)
 ((Sfundo.Parakozov@thomsonreuters.com;))