Pensions and Retirement Training Course on Hardship Withdrawals and Policy Design

Module 1: Introduction to Hardship Withdrawals in Pension Schemes
Definition and purpose of hardship withdrawals
Global trends and the evolution of early access provisions
Balancing liquidity needs and retirement income protection
Common reasons for withdrawals: medical emergencies, housing, education, unemployment, disasters
Comparative review of hardship provisions across jurisdictions
Case study: Hardship withdrawal frameworks in Kenya, South Africa, and the United States

Module 2: Policy Design and Eligibility Criteria
Establishing clear and equitable policy frameworks
Defining qualifying events and supporting documentation
Setting withdrawal limits, waiting periods, and frequency caps
Interaction between hardship withdrawals and contribution accumulation
Aligning policy with labor laws, tax codes, and national pension regulations
Workshop: Drafting a hardship withdrawal policy for a defined contribution scheme

Module 3: Financial, Actuarial, and Tax Implications
Impact on fund solvency, liquidity, and investment strategy
Modeling the long-term cost of early access on member benefits
Managing cross-subsidization risks between members
Tax treatment of hardship withdrawals and compliance considerations
Role of actuaries in reviewing and approving withdrawal assumptions
Exercise: Quantitative analysis of withdrawal impact on a member’s retirement adequacy

Module 4: Governance, Controls, and Member Communication
Governance frameworks for withdrawal approvals and oversight
Internal controls, documentation, and audit requirements
Communication strategies to manage member expectations
Educating members on alternatives to withdrawals (loans, emergency savings)
Role of technology in streamlining application and approval processes
Case study: Digital transformation of hardship withdrawal processes in pension administration

Module 5: Monitoring, Evaluation, and Policy Evolution
Establishing monitoring metrics and withdrawal trend analysis
Evaluating policy effectiveness and unintended consequences
Responding to crises (e.g., pandemics or natural disasters) with temporary access rules
Integrating behavioral insights to discourage unnecessary withdrawals
Periodic review and stakeholder consultation in policy updates
Capstone activity: Developing a comprehensive hardship withdrawal and communication policy framework