{"id":547144,"date":"2021-12-15T08:15:46","date_gmt":"2021-12-15T06:15:46","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=547144"},"modified":"2021-12-15T08:15:46","modified_gmt":"2021-12-15T06:15:46","slug":"here-is-the-new-retirement-system-proposed-for-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/547144\/here-is-the-new-retirement-system-proposed-for-south-africa\/","title":{"rendered":"Here is the new retirement system proposed for South Africa"},"content":{"rendered":"<p>The National Treasury has published two papers on proposed retirement reforms for South Africa for public comment.<\/p>\n<p>The proposals aim to boost household savings by increasing preservation before retirement and increasing flexibility through partial access to retirement funds through a &#8216;two-pot system&#8217;.<\/p>\n<p>&#8220;Government is sympathetic towards the difficulty many South Africans are currently facing due to the Covid-19 pandemic and has engaged with the regulators and other key stakeholders to work out relief measures for consumers,&#8221; Treasury said.<\/p>\n<p>&#8220;As a result, measures on contribution suspension and holiday, as well as expansion of access to living annuities were enabled to ease the plight of some members.&#8221;<\/p>\n<p>Even though retirement savings should preferably only be used for their intended reason, namely retirement provision, Treasury said that it recognises that there might be a need to allow some access to accumulated retirement savings before retirement.<\/p>\n<p>Public comments on these papers need to be submitted by <strong>31 January 2022.<\/strong><\/p>\n<p><strong>How it will work <\/strong><\/p>\n<p>The proposal currently being considered through<strong><a href=\"http:\/\/www.treasury.gov.za\/comm_media\/press\/2021\/2021121401%20Two-pot%20system%20retirement%20proposal%20and%20auto%20enrolment.pdf\" target=\"_blank\" rel=\"noopener\"> the first paper<\/a><\/strong> released for public consultation is the introduction of a two-pot system. This will enable the restructuring of retirement contributions into two pots:<\/p>\n<ul>\n<li>One pot is to be preserved until retirement (two-thirds);<\/li>\n<li>The second pot would enable pre-retirement access (one-third).<\/li>\n<\/ul>\n<p>&#8220;Government is of the view that preservation of contributions must accompany such restructuring to ensure sufficient retirement provision and avoid old-age poverty as well as reliance on the state. Such restructuring will entail the protection of vested rights on accumulated retirement savings prior to the new two-pot structure taking effect,&#8221; Treasury said.<\/p>\n<p><strong>Mandatory enrollment<\/strong><\/p>\n<p>Treasury said the\u00a0proposed restructuring of retirement savings into an accessible pot and a retirement pot will address the situation most members of funds find themselves in because of not having any alternative form of short-term savings.<\/p>\n<p>&#8220;This has been exacerbated by the Covid-19 pandemic, resulting in some workers experiencing loss or reduced incomes. Consideration is also being given to introducing <b>automatic enrolment<\/b>\u00a0-leading to mandatory enrolment &#8211;\u00a0into the retirement system,&#8221; it said.<\/p>\n<p>&#8220;Not all employers provide a retirement benefit for their employees. Unless these employees self-enrol in a retirement annuity fund, they are left with no provision for retirement.&#8221;<\/p>\n<p>The <strong><a href=\"http:\/\/www.treasury.gov.za\/comm_media\/press\/2021\/2021121401%20Commercial%20Umbrella%20Funds.pdf\" target=\"_blank\" rel=\"noopener\">second paper<\/a><\/strong> out for comment seeks to improve governance in retirement funds in general, but particularly for commercial umbrella funds. Key amongst these is the deviation from the norm of having 50% employee representation in a commercial umbrella fund.<\/p>\n<p><iframe loading=\"lazy\" src=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2021\/12\/Two-pot-system.pdf\" width=\"100%\" height=\"600\"><\/iframe><\/p>\n<hr \/>\n<p><strong>Read: <a href=\"https:\/\/businesstech.co.za\/news\/banking\/545752\/here-are-all-your-banking-fees-for-2022\/\" target=\"_blank\" rel=\"noopener\">Here are all your banking fees for 2022<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The National Treasury has published two papers on proposed retirement reforms for South Africa for public comment.<\/p>\n","protected":false},"author":10,"featured_media":536986,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[961],"tags":[26],"class_list":["post-547144","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/547144","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=547144"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/547144\/revisions"}],"predecessor-version":[{"id":547158,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/547144\/revisions\/547158"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/536986"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=547144"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=547144"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=547144"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}