Submission to South African Parliament about serious concerns regarding the DA’s proposed Pension Funds Amendment Bill and an alternative through behavioural finance.
Ubiquity AI, and employee benefits consultancy, Ultreia Consulting Services, came together to express grave concerns with a Democratic Alliance Proposal to amend the Pension Fund Act that could allow retirement fund members to access up to 75% of the value of their retirement fund via secured loans to cover debt repayments. This is a great opportunity for financial services provider across the retirement value chain and credit lenders to generate new revenue streams, but bad news for retirement members.
Ubiquity AI is developing the world’s first Blockchain-AI virtual assistant as a viable behvioural finance fintech solution to address high consumer over-indebtedness. During its development, we focused on one key measure of financial health. That is the debt-to-disposable income ratio. The ratio for South African households is lower than many other countries, including most developed nations, where household debt/ disposable is higher than 100 – this means that for every dollar of a household’s net pay, the household owes more than a dollar in debt repayment. Yet some 25% of retail credit accounts in South Africa are in arrears.
Ubiquity AI participated in South African Parliamentary hearings into the National Credit Amendment Bill (which has since been promulgated), with aims to alleviate the debt burden of households. Every stakeholder which participated in the hearings, from microlenders, to banks to the National Credit Regulator, all ranked access to financial literacy and access to financial education as the most viable solution and biggest contributing factor to over-indebtedness. Rather than encourage the borrowing from retirement savings, which only moves the problem down the road, we believe that the South African government should invest more on behavioural finance. Ubiquity AI has the tools to assist the government with what would be a far more productive strategy.
In our submission to the Speaker of the National Assembly, we acknowledge that South Africans face untold hardship. We also believe the government’s proposal is an extremely poor strategy, considering the household debt crisis in which South Africa currently finds itself. Ubiquity AI spent two years in Parliament as the Portfolio Committee on Trade and industry deliberated and debarred issues around debt, culminating in the National Credit Amendment Act. Going down this path will exacerbate the country’s debt problem and siphon retirement savings.
Both Ubiquity AI and Utlreia are passionate about savings and debt alleviation, as shown by our demonstration of businesses focusing on people, especially financially-vulnerable segments of society. We will take an aggressive stance against this Bill should it be pursued in Parliament.
Kaveer Beharee: Founder and CEO – Ubiquity AI