Categories: Finance NewsNews
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2023-12-07 7:34 AM

South Africa’s Two-Pot Retirement System Implementation Shifted

  • Implementation Date Shift: The main focus of the article revolves around the decision to shift the implementation date of South Africa's new Two-Pot retirement system from the initially proposed date of 1st March 2024 to the revised date of 1st September 2024.
  • Two-Pot Retirement System Overview: The article introduces the key components of the new system, highlighting its division into a "savings pot" (accessible before retirement, receiving up to one-third of funds) and a "retirement pot" (accessible at retirement, requiring at least two-thirds of contributions).
  • Industry Stakeholders' Responses: The article discusses the reactions and opinions of major industry stakeholders, emphasizing their appreciation for the extended timeline. Stakeholders commend the decision as it allows more time for necessary system updates and legislative processes, ensuring a smoother transition and efficient service delivery to South African citizens reliant on these funds.
By Miriam Matoma

In a recent development concerning South Africa’s retirement landscape, asset managers across the nation have expressed their appreciation for the decision to shift the implementation date of the new Two-Pot retirement system to 1st September 2024. This change, aimed at optimizing the retirement framework, introduces a savings pot and a retirement pot, emphasizing accessibility and distribution of contributions.

Initially slated for launch on 1st March 2024, the revised system’s rollout was postponed following recommendations from the National Treasury. The Treasury suggested a delay until 1st March 2025, citing the need for additional time for the asset management industry to adapt their systems.

However, the Standing Committee on Finance diverged from the Treasury’s proposal and maintained the implementation date of 1st March 2024. Responding to this, Finance Minister Enoch Godongwana presented a compromise, advocating for a shift to 1st September 2024.

Godongwana emphasized that the extended timeline aims to facilitate the passage of necessary legislation and afford stakeholders ample opportunity to update their systems efficiently. Subsequently, the committee accepted his proposal, thereby extending the implementation period by six months.

Michelle Acton, representing Old Mutual, lauded the decision, highlighting the benefits of this extended timeframe. She noted that the delay allows institutions like Old Mutual and stakeholders such as SARS to finalize system builds and procedural updates crucial for early withdrawal claims under the new system. Acton stressed the dependence on the finalization of the Draft Revenue Laws Amendment Bill and the Pension Funds Amendment Bill for this purpose.

Additionally, Acton emphasized that retirement funds require a minimum of six months to finalize system builds and structures essential for facilitating member withdrawals once the legislation is gazetted.

“This extended timeframe reflects our collective commitment to delivering a well-prepared and efficient system. It ensures optimal service provision to South Africans relying on these funds,” Acton affirmed.

Richard Carter from Allan Gray echoed Acton’s sentiments, regarding the new implementation date as a reasonable compromise. He emphasized the importance of the additional six months, providing more preparation time for retirement funds and administrators to adapt to the changes without unduly delaying fund access for members in dire need.

Carter expressed anticipation for the finalization of legislation, urging a swift process to clarify required changes and enable prompt implementation.

The adjustment in the implementation date of the Two-Pot Retirement System signifies a pivotal moment for South Africa’s retirement landscape. It showcases a concerted effort from the government and industry stakeholders to ensure a smooth transition and effective utilization of retirement funds for the benefit of South African citizens.

As the industry gears up for this transformation, stakeholders remain focused on the forthcoming legislative clarity and the ensuing implementation of necessary changes to enable a seamless transition to the reformed retirement framework.

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Miriam Matoma

Miriam is a freelance writer, she covers economics and government news for Rateweb. You can contact her on: Email: Twitter: @MatomaMiriam