Capitec CEO Gerrie Fourie has expressed concerns over the two-pot retirement system, believing it will hurt long-term retirement savings.<\/p>\n\n\n\n
The two-pot retirement system went live on 1 September 2024, substantially changing retirement outcomes in South Africa. <\/p>\n\n\n\n
The new system introduced a new “savings pot,” which holds one-third of retirement savings from implementation, accessible before retirement.<\/p>\n\n\n\n
The second “retirement pot” will hold two-thirds of savings from implementation and only be accessible after retirement. <\/p>\n\n\n\n
A third “vested” pot will hold all the retirement savings before the two pot’s implementation date, minus R30,000 used as seed capital in the “savings pot,” and will follow prior legislation. <\/p>\n\n\n\n
The system has already resulted in billions of outflows from retirement savings. <\/p>\n\n\n\n
Momentum saw R2.5 billion leave retirement savings in the first 25 days from the system’s implementation, while Alexforbes saw over R1 billion in the first week.<\/p>\n\n\n\n
By 12 September, the South African Revenue Service (SARS) said it had received 161,607 tax directive applications related to the new two-pot retirement system, amounting to R4.1 billion.<\/p>\n\n\n\n
Chantal Marx, Head of Investment Research at FNB Wealth and Investments, previously said that the two-pot system could benefit retailers and banks.<\/p>\n\n\n\n
\u201cThe introduction of the two-pot system, together with possible interest rate cuts, decent momentum in wages, and lower inflation, could boost consumer confidence and drive an increase in spending in the months ahead,\u201d said Marx.<\/p>\n\n\n\n
\u201cThis is expected to be positive for domestic retailers, particularly discretionary names (clothing and furniture mainly).\u201d<\/p>\n\n\n\n
\u201cThere could also be some benefit accruing to the banks, as savers may utilise their withdrawals to pay down debt<\/strong>, which could improve asset quality and free up capital to drive higher quality loan origination as well as higher transaction activity.\u201d<\/p>\n\n\n\n Capitec was widely expected to benefit from the new system, as it has large amounts of unsecured debt.<\/p>\n\n\n\n However, when speaking with BusinessTech, Fourie said it is far too early to see if the system has resulted in any meaningful change at the bank.<\/p>\n\n\n\n Moreover, Fourie noted that the new system would hurt retirement outcomes in the long run, adding that retirement fund members should not withdraw from their savings.<\/p>\n\n\n\n