{"id":774894,"date":"2024-06-03T08:50:28","date_gmt":"2024-06-03T06:50:28","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=774894"},"modified":"2024-06-03T08:50:33","modified_gmt":"2024-06-03T06:50:33","slug":"new-retirement-system-for-south-africa-hits-roadblocks","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/774894\/new-retirement-system-for-south-africa-hits-roadblocks\/","title":{"rendered":"New retirement system for South Africa hits roadblocks"},"content":{"rendered":"\n<p>President Cyril Ramaphosa may have signed the Revenue Laws Amendment Bill, but other pieces of legislation and systems still need to be signed and created before the Two-Pot retirement system becomes effective.<\/p>\n\n\n\n<p>There are at least four roadblocks for the new system. Specifically:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The signing of the Pension Fund Amendment Bill needs to take place<\/li>\n\n\n\n<li>The Revenue Second Amendment Bill needs to be finalised<\/li>\n\n\n\n<li>SARS needs to finalise system requirements<\/li>\n\n\n\n<li>The seeding calculations for the new system can only take place after August<\/li>\n<\/ul>\n\n\n\n<p>The signing of the Revenue Laws Amendment Bill will allow for the implementation of the Two-Pot system on 1 September 2024. <\/p>\n\n\n\n<p>The new system will allow individuals to access up to one-third of their retirement savings before retirement via a &#8220;Savings Pot.&#8221; The remaining two-thirds will be placed in a &#8220;Retirement Pot&#8221; that will only be accessible upon retirement. <\/p>\n\n\n\n<p>\u201cThere are significant long-term benefits of this new system, which will bolster financial well-being and provide more flexibility,\u201d said Blessing Utete, Managing Executive of Old Mutual Corporate Consultants. <\/p>\n\n\n\n<p>That said, the success of the system rests on preparation and targeted member education.<\/p>\n\n\n\n<p>\u201cOne of the most important points to communicate to members is when their money will be accessible. Even though the legislation goes live on 1 September, it doesn&#8217;t mean funds may be able to pay out on that date as there are several steps that need to be implemented first,&#8221; said Utete. <\/p>\n\n\n\n<p>\u201cThis is primarily because the allocations to the Savings Pot can only happen from 1 September onwards\u201d.<\/p>\n\n\n\n<p>Under the new system, members will see the lower of either 10% of the value of their retirement fund or R30,000 as of 31 August 2024 allocated to their Savings Pot from 1 September. <\/p>\n\n\n\n<p>From then on,  two-thirds of any new savings will be dedicated to retirement and cannot be accessed until then.<\/p>\n\n\n\n<p>Members of Provident and Provident Preservation Funds who were 55 or older as of 1 March 2021 in that same fund will decide to opt into the new system or stay in the current system.<\/p>\n\n\n\n<p>In addition, Michell Action, Old Mutual&#8217;s Retirement Reform Executive, said that the payouts from the emergency pot will not be made immediately. <\/p>\n\n\n\n<p>\u201c<strong>Seeding calculations can only be conducted after the end of August<\/strong>, using the values from that month,&#8221; said Action.<\/p>\n\n\n\n<p>&#8220;The legislation allows for seeding calculations soon after implementation, not necessarily on that date. As a result, actual access for members will likely take place after 1 September.&#8221; <\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-wp-embed is-provider-businesstech wp-block-embed-businesstech\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"wp-embedded-content\" data-secret=\"gGCxLlE0GW\"><a href=\"https:\/\/businesstech.co.za\/news\/finance\/774446\/what-to-keep-in-mind-when-investing-in-south-africa\/\">What to keep in mind when investing in South Africa<\/a><\/blockquote><iframe loading=\"lazy\" class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;What to keep in mind when investing in South Africa&#8221; &#8212; BusinessTech\" src=\"https:\/\/businesstech.co.za\/news\/finance\/774446\/what-to-keep-in-mind-when-investing-in-south-africa\/embed\/#?secret=IA01gVnHPq#?secret=gGCxLlE0GW\" data-secret=\"gGCxLlE0GW\" width=\"500\" height=\"282\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe>\n<\/div><\/figure>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Admin still to do <\/strong><\/p>\n\n\n\n<p>The funds also need to do a great deal of work before they are ready for the new legislation. <\/p>\n\n\n\n<p>The seeding calculation, for instance, determines the initial amounts that will be allocated to the different pots and will depend on the individual savings of each member. <\/p>\n\n\n\n<p>Depending on the rules of each retirement fund, the process could still take several working days to weeks. <\/p>\n\n\n\n<p>\u201cThe Two-Pot system is designed to be an emergency savings vehicle, giving you that initial boost to help build your emergency savings,&#8221; said Acton. <\/p>\n\n\n\n<p>&#8220;However, if you deplete it on day one, it ceases to serve as emergency savings.&#8221;<\/p>\n\n\n\n<p>In addition, <strong>the signing of the Pension Fund Amendment Bill<\/strong> and <strong>the finalisation of the Revenue Second Amendment Bill<\/strong> are crucial <strong>before the legislation is in place for implementation<\/strong>.<\/p>\n\n\n\n<p><strong>SARS also needs to finalise system requirements<\/strong>, as no Savings Pot payments can be made without an easy tax deduction directive process.<\/p>\n\n\n\n<p>Members will also need to have their tax affairs in order before applying for a Savings Pot withdrawal. SARS may deduct any other outstanding tax before payment is made.&nbsp;<\/p>\n\n\n\n<p>Members will need a tax number to apply for a Savings Pot withdrawal.<\/p>\n\n\n\n<p>\u201cWe need to significantly ramp up employee financial literacy initiatives around retirement reforms and overall financial well-being to facilitate a successful integration of the system,\u201d said Utete.<\/p>\n\n\n\n<p>\u201cMembers will also need to take the time to understand this new system and the importance of saving for retirement.&#8221; <\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>Read: <a href=\"https:\/\/businesstech.co.za\/news\/government\/774786\/2024-south-africa-election-final-national-and-provincial-results-and-seat-allocations\/\">2024 South Africa Election: Final national and provincial results and seat allocations<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The new Two-Pot retirement system may have gotten the green light, but experts from Old Mutual say certain aspects need to be ironed out. <\/p>\n","protected":false},"author":95,"featured_media":645183,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[26,1110],"class_list":["post-774894","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-headline","tag-old-mutual"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/774894","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=774894"}],"version-history":[{"count":6,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/774894\/revisions"}],"predecessor-version":[{"id":774942,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/774894\/revisions\/774942"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/645183"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=774894"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=774894"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=774894"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}