{"id":755171,"date":"2024-02-27T07:00:00","date_gmt":"2024-02-27T05:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=755171"},"modified":"2024-02-28T09:46:25","modified_gmt":"2024-02-28T07:46:25","slug":"two-pot-retirement-system-for-south-africa-incoming-but-not-everyone-has-to-take-part","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/755171\/two-pot-retirement-system-for-south-africa-incoming-but-not-everyone-has-to-take-part\/","title":{"rendered":"Two-pot retirement system for South Africa incoming – but not everyone has to take part"},"content":{"rendered":"\n

South Africa’s upcoming two-pot retirement system is set to drastically change the retirement industry, but not every fund contributor will have to participate. <\/p>\n\n\n\n

The two-pot system will come into effect on 1 September 2024 and is intended to help retirement fund members needing funds during an emergency. <\/p>\n\n\n\n

One-third of all retirement contributions from 1 September 2024 will be allocated to the “savings component (pot)”, and members will be able to make a withdrawal of up to 100% that has accumulated in that component prior to retirement. <\/p>\n\n\n\n

A minimum withdrawal of R2,000 will apply, and each member will be limited to one withdrawal per tax year. <\/p>\n\n\n\n

Allan Gray’s Jaya Leibowitz said that the withdrawal will be taxed at the member’s marginal income tax rate in the year of withdrawal,” and will reduce the tax-free amount available to members at retirement. .<\/p>\n\n\n\n

The “retirement component” will be inaccessible before the member retires and will consist of two-thirds of all retirement contributions plus investment growth. <\/p>\n\n\n\n

The total amount in this component must be used to buy an annuity-providing product at retirement, including a living annuity or guaranteed life annuity. <\/p>\n\n\n\n

Any savings prior to the September 2024 implementation will be put in the “vested component”, which will follow all current retirement regulations that apply. <\/p>\n\n\n

\n
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Source: Allan Gray<\/figcaption><\/figure><\/div>\n\n\n

Not the same for everyone <\/strong><\/p>\n\n\n\n

However, members of provident funds who were 55 years old or older on 1 March 2021 and have vested rights related to their ongoing contributions to that provident fund will be treated differently. <\/p>\n\n\n\n

In 2021, provident fund members were barred from accessing 100% of their savings as a lump sum payment. <\/p>\n\n\n\n

Provident funds thus became more like pensions, where fund members can withdraw one-third of their benefit as a lump sum while the remaining two-thirds must be used to purchase an annuity-providing product. <\/p>\n\n\n\n

These “different” members will have the right to choose whether they want to participate in the two-pot system. <\/p>\n\n\n\n

“The most recent draft of the legislation excludes these individuals by default. Where such a member does not actively elect to participate in the two-pot system, their contributions will continue to be credited entirely to the vested component, and the current rules will continue to apply,” said Leibowitz. <\/p>\n\n\n\n

\n\n\n\n

Read<\/strong>: Collecting outstanding e-toll bills \u2013 not without a fight<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

South Africa’s new retirement system will not be a universal change.<\/p>\n","protected":false},"author":95,"featured_media":755199,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[6756,26],"class_list":["post-755171","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-allan-gray","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/755171","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\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=755171"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/755171\/revisions"}],"predecessor-version":[{"id":755691,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/755171\/revisions\/755691"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/755199"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=755171"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=755171"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=755171"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}