Tag: two-pot system

Revisions to the draft legislation on the “two-pot” system for retirement funds were published on 9 June 2023, incorporating proposals mentioned in Chapter 4 of the 2023 Budget Review.

As the two countries implement reforms, the local situation is unlikely to spiral out of control as it did in France. In October 2010 there were massive strikes across France against pension reform. Activist Jean-Baptiste Reddé’s slogan “Ecoutez la colère du people" (Listen to the people’s rage) became world famous as the symbol that epitomised public sentiment.  

The proposed "two pot" retirement system would allow people to have the best of both worlds – early access to a portion of their retirement funds, should it be necessary, while still preserving a significant portion for when they retire. The changes are set to take effect on 1 March 2024, but without further draft legislation being published in February, there are concerns that industry players will not have time to implement changes to meet this deadline.

In his budget speech on 22 February 2023, the Minister of Finance announced that the proposed two-pot system will take effect on 1 March 2024. Many had hoped for a delayed implementation date, given the development required to systems to accommodate the new structure.

The National Budget delivered by South Africa’s Minister of Finance, Enoch Godongwana, showed that government is making some significant financial commitments to restore Eskom to viability and maintain social grants. But with GDP growth projected at 1.4% on average from 2023 to 2025, and a potential tapering-off of the commodities boom over the medium term, how will government fund these commitments?

South Africa’s retirement fund legislation has undergone a series of changes since 2012 as part of government’s retirement reform process, which is aimed at ensuring that retirees make adequate retirement provision.

On 29 July 2022, National Treasury released the 2022 Draft Revenue Laws Amendment Bill for public comment until 29 August 2022 to introduce the 'two-pot' system for retirement savings that was flagged in the National Budget.

The new two-pot system will provide short relief for SA retirement fund members, but the trade-off will include  increased complexity and possibly increased administrative costs, notes Blessing Utete, Managing Executive: Old Mutual Corporate Consultants.

In a recent conference, National Treasury Acting DG Ismail Momoniat explained National Treasury’s views on the two-pot retirement system, governance of umbrella funds and changes to Regulation 28. Ismail Momoniat, Acting Director-General at National Treasury (NT), addressed the recent Pension Lawyers Association Virtual Conference in May 2022 with an update on retirement reform developments.