The two-pot system is intended to take effect from 1 March 2023, about seven months from now, but Blessing Utete, managing executive of Old Mutual Corporate Consultants, says that date might not give the industry enough time to get all its ducks in a row.The changes effectively mean that retirement fund members will be able to access a third of their retirement savings, housed in a “savings pot”, while 70% of their savings will be ringfenced in the “retirement pot”.
To offset the costs and also discourage people from treating their retirement fund as a transactional account, the draft legislation cautions that you can only make a withdrawal from your savings pot once a year — and it must be a minimum amount of R2,000. “We would suggest that the regulators allow annual withdrawals, with a free once-off withdrawal and a free withdrawal every five years. Additional withdrawals should be subject to an administration fee deducted from the benefit,” she suggested.
“It’s another disincentive, which is great, and is likely to make retirement fund members think twice before making that withdrawal. Retirement fund administrators will have to apply for a tax directive so they know how much tax to take off,” he explains.
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