This is a rather disturbing story. We're experiencing a flood of early pension withdrawals. However, I don't think the reasons are as simple as put out in this story.
Cash-strapped South Africans are making unprecedented premature withdrawals of their provident and pension funds in a battle to service debts.

The country's overall current debt is R1 139-billion compared to the R297-billion of 10 years ago.

In basic terms, South Africans are spending almost 83 percent of their monthly income servicing debt - up from 60 percent in 1998.

Cosatu fears that the economy could be ruined as workers are "running scared" and taking their retirement packages because of rumours that the government wants to freeze their pension funds by 2010.

The National Treasury is aware of the phenomenon, which trade unions believe has been driven by a combination of high levels of debt and fears that the government planned to nationalise pension savings.

The SA Clothing and Textile Workers' Union said that last year alone, more than R277-million was paid out to more than 7 000 workers who resigned to cash in their provident or pension funds.

The phenomenon has also hit other industries, including mining. "Workers have now found a new way to settle their debts by cashing their retirement savings," said National Union of Mineworkers general secretary Frans Baleni.

This was especially prevalent among white-collar workers on gold mines.

Koos Bezuidenhout, CEO of mining union Uasa, said the cashing-in of pensions was "creating a nation of poor people who will rely on state grants to survive".

The union has had more than 500 applications in the past three months of people intending to cash their pension money.

Cosatu retirements fund co-ordinator Jan Mahlangu said: "We will soon embark on educational roadshows with the government to discourage people from falling victim to this."
full story from IOL here
Union concern for the distant retirement prospects of employees is quite touching. But I suspect their real concern is for their lucrative slice of administration income.

Here are a few more possible contributing factors:
  • Emigration - surely I don't need to say too much here.
  • Greedy administrators - just look at the cars they drive. They are doing it with your money.
  • Too many poor pensioners already - The evidence is in; living off a capital sum of R500k just doesn't go as far as it used to twenty years ago. Is R5 million going to be much better in twenty years time?
  • Today is what counts - We live in an age where tomorrow will just have to take care of itself. We are measured by where we are today.
  • Lack of ethics - The longer you leave a pile of money in somebody else's hands, the higher the likelihood that it wont be there when you're supposed to get it back.
  • Shorter life expectancy - How many people do you know that did not make it to pensionable age already?

There are probably more...