By now youve probably heard that as of 1 September this year, National Treasury is introducing changes to the rules around accessing your retirement funds, known as the two-pot system. But what are these pots, why are there three pots in a two-pot system and what does this all mean for you?
Natasha Huggett Henchie????, Principle Consultant at financial advisory firm NMG Benefits, breaks it down for us
First, it helps to understand why the system is changing. The current system allows you to cash in your company retirement funds when you change jobs, and many people do this, which means that when its time to retire, they dont have nearly enough money for their retirement. The aim of the two-pot system, therefore, is to prevent this, while still giving people access to a portion of their funds for emergencies.
In essence, instead of all retirement savings going into one place, or pot, the retirement savings will be split into two different pots, each with different rules for when and how the funds can be accessed.
Who is eligible to participate?