The National Treasury passed the Pension Funds Amendment Bill and the Revenue Laws Amendment Bill, and the president must sign them into law. However, a few steps remain in finalising the implementation of the two-pot system, which includes legislative changes to the Income Tax Act and the Government Employees Pension Law.
However, sufficient details are now available for the board of trustees and management committee of retirement funds to apply their minds to what the introduction of the two-pot system means for them. When it comes to defined benefit funds, the input of the actuary will be critical in terms of any changes required to the fund rules.Even though the intended two-pot implementation date of 1 September 2024 is still more than four months away, it is important to educate and manage the expectations of all fund members. Many members are already enquiring about gaining access to their savings component as a result of their financial circumstances.
The withdrawal implications and long-term impact on a member’s net replacement ratio as a measure of their readiness for retirement and the reduction in the tax-free benefits at retirement also need to be emphasised from the start. Fund member communication templates will also have to be updated for new and existing retirement fund members.
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