Old Mutual welcomes the recent signing of the Revenue Laws Amendment Bill by the President, a significant step forward for retirement savings in South Africa. The Bill paves the way for the implementation of the Two-Pot Retirement System on September 1, 2024.
There are significant long-term benefits of this new system, which will bolster financial well-being and provide more flexibility, says Blessing Utete, Managing Executive of Old Mutual Corporate Consultants. However, the success of the Two-Pot Retirement System hinges on thorough preparation and targeted member education.
One of the most important points to communicate to members is when their money will be accessible. Even though the legislation goes live on 1 September, it doesn't mean funds may be able to pay out on that date as there are several steps that need to be implemented first he said. This is primarily because the allocations to the Savings Pot can only happen from 1 September onwards.
From September 1, members will see a lower of 10% of the value of their retirement fund or R30,000 as of 31 August 2024 to be allocated to their savings pot under the new system. From that point on, two-thirds of any new savings will be reserved for retirement and cannot be accessed until then.
Members of Provident and Provident Preservation Funds who were 55 or older as of March 1, 2021 in that same fund, will have the choice of whether to opt into the new system or stay in the current system.
