The Financial Services Board (FSB) this week again warned consumers against accepting bridging finance in anticipation of lump-sum pension benefit payouts, and pledging the payout to moneylenders.
Dube Tshidi, the FSB's deputy executive officer of pension funds, says people who accept loans from moneylenders in anticipation of their pension benefit payout are contravening section 37 of the Pension Funds Act.
"In terms of the Act, it is an offence for any pension fund member or beneficiary to transfer, cede, pledge or hypothecate any pension fund benefit or right, because the fund concerned may withhold or suspend the benefit," he says.
The warning follows newspaper advertisements by moneylenders in Gauteng who promise "bridging cash" to people who are waiting for pension package payouts. The adverts specify that loans will only be considered in cases of lump-sum payouts.
"People who are uncertain about their rights and obligations regarding pension fund benefits must please direct all enquiries and concerns to the FSB's call centre. Ignorance of the law is not worth the risk in this instance," Tshidi says.
For information regarding financial services, including retirement benefits, you can phone the call centre's toll-free numbers: 0800 110 443 or 0800 202 087.