The standing committee on Finance has once again changed the implementation date of the two-pot retirement system.
In the new retirement system, up to one-third of all retirement savings will be placed into a “savings pot”, which will be accessible before retirement.
A minimum of two-thirds of a pension fund will then be placed into a “retirement fund”, which can only be accessible at retirement.
This is designed to ensure that South Africans can access some funds in case of emergency while preserving the majority of funds for retirement.
Initially, the system was set to start on 1 March 2024, which created anxiety in the asset management community due to the tight deadline for the new system.
National Treasury then recommended that the new system only take effect on 1 March 2025. However, during deliberations on the Revenue Laws Amendment Bill (RLAB), the Standing Committee on Finance voted that the system would go live on the original date of 1 March 2024.
Finance Minister Enoch Godongwana thus wrote a letter to the Standing Committee of Finance with a compromise, suggesting that the implementation date be moved to 1 September 2024.
The minister said that the Pension Funds Amendment (PFA) Bill has not yet been tabled in parliament, which is required for the RLBA to be effective as they are accompanying Bills.
“Therefore, the effective date of the RLAB cannot predate the implementation of the PFA Bill. Given that the PFA Bill has not yet been tabled, there is a concern that the legislative process will not be completed by 1 March 2024,” the minister wrote.
“Even if both the PFA Bill and the RLAB can be promulgated by 1 March 2024, funds will then be required to amend their funds to be submitted to the Financial Sector Conduct Authority (FSCA) for registration, and funds ought to communicate proposed amendments to those fund rules and its impact to members.”
Godongwana added that SARS, the FSCA, the GEPF and the Government Pensions Administration Agency indicated they could have their systems ready for September.
Following the recommendations, the ANC, DA and EFF supported the minister’s recommendation – moving the implementation date to 1 September 2024.