The National Treasury wants ‘two-pot’ retirement system delayed until 2025, a year later than the original date of 1 March 2024. This delay is intended to provide the savings and investment industry with additional time to prepare for the complex task of administering the changes.
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Changes to the Pension Funds Act
The proposal was presented to Parliament’s Standing Committee on Finance as part of a joint feedback session with the SA Revenue Service. The session focused on the 2023 Draft Revenue Laws Amendment and Draft Revenue Administration and Pension Laws Amendment Bills. These bills contain legislative amendments to the Pension Funds Act, which are crucial for the smooth implementation and administration of the two-pot retirement system.
Treasury wants ‘two-pot’ retirement system delayed until 2025
In addition to proposing a new effective date for the system, the Treasury has also suggested increasing the amount that workers can immediately access once the two-pot system comes into effect. This so-called seed capital amount will increase from an initial R25 000 to R30 000. However, any lump sum withdrawals from a worker’s savings pot after 1 March 2025, including seed capital, will be subject to tax if withdrawn before retirement.
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Despite these changes, Cosatu has expressed deep disappointment with the Treasury’s proposal to delay the implementation of the two-pot system. They argue that this delay will result in financially struggling workers resigning from their jobs in order to access their pension savings.