Two-pot retirement system: NCOP passes Pension Funds Amendment Bill

The two-pot retirement system is one step closer to implementation on 1 September this year after the NCOP passed the Pension Funds Amendment Bill on Thursday with changes that clear up some discrepancies.

The Bill aims to amend the Pension Funds Act to introduce a savings withdrawal benefit and with the Revenue Laws Amendment Bill will establish the two-pot retirement system that will come into effect on 1 September this year to support long-term retirement savings while offering flexibility to help fund members in financial distress.

While pensions funds and pension fund administrators have praised the Bill because it will ensure that people do not cash out their pensions before retirement, there is concern that people do not understand the implication, such as paying tax when they withdraw from their funds.Michelle Acton, retirement reform executive at Old Mutual, says the two-pot retirement system will be a massive change to the pension system in South Africa and bring the country in line with other countries.

While she says she believes that Old Mutual will be ready by 1 September and has already submitted its rules to the FSCA, she points out that pension fund members do not understand the two-pot retirement system at all and therefore a lot of work still needs to be done to ensure that they do over the next five months.

Funds must make necessary preparations, such as ensuring that they have the correct bank details for all members.

Source: News Formal (newsformal.com)

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