Although the implementation date of the two-pot retirement system is merely a month away, many pension fund members and employers are still not sure about the practical implications.
This has prompted the Building Industry Bargaining Council BIBC to offer a clear explanation of why this legislation was drafted and, more importantly, how it will affect them directly.
The two-pot retirement system essentially aims to empower more South Africans to preserve their retirement savings when they leave a job or change employment while enabling controlled access to these savings in times of financial hardship, Danie Hattingh, principal officer of the BIBC Retirement Fund, explains.
It is primarily a governmental measure aimed at preventing a repeat of the situation that arose during the Covid-19 pandemic when retrenched citizens did not have emergency funds to fall back on.
The system applies to any South African who is a member of a pension fund , provident fund, retirement annuity or preservation fund and divides members benefits into two separate pots a savings pot and a retirement pot, with one-third of contributions going into the savings pot, which can be accessed once a tax year if you need to.
