By: Natasha Archary
Concerns have been raised over National Treasury’s recommendation to delay the two-pot retirement implementation date, which was supposed to take effect from 01 March 2024.
Natasha Hugget-Henchie, Principal Consultant at NMG Benefits joins Gugulethu Mfuphi on Kaya Biz to unpack the concerns.
Under the new system, South Africans will be able to access upto one-third of their retirement funds before retirement through a “savings pot.”
The other funds will be locked in a “retirement fund” or the second pot, which will only be accessible when the member retires.
“Unfortunately, the people who are not ready are not the industry but the regulators.
That’s the biggest confusion, the South African Revenue Services (SARS) was supposed to give us tax rates, and they’re not ready. The Financial Sector Conduct Authority (FSCA) have to give us rule templates, so we can draft our rules, those are not ready.
National Treasury or whoever’s drafting the Bill, hasn’t got the bill ready.
So, the postponement, and the industry is actually saying we need to know exactly what you’re putting in the legislation so that we can get our systems 100% ready.”
Natasha says the two-pot retirement system is still relevant because people are still heavily in debt.
“Inflation pressures are there, fuel and food costs have gone up, everything is increasing.
People are stretched, they’ve had to borrow, they really are just looking for some way of getting some little bit of money to just lift their heads above water again.
The whole rationale behind this was a kind of quid pro quo, you know, we’re going to give you access to some of your money, we’re going to give you a little seed capital, and on-going access to a third of your contributions, at any time without any reason, but what government wants in exchange is that the other two-thirds of your contributions get locked away until retirement.
The hope in the modelling shows that this will improve retirement outcomes, and it’s a well thought out principle to allow people to have access to those funds for an emergency, short term funds and long term funds.”
Natasha advises the public not to panic, saying the two-pot retirement plan is 99% a done deal, and reminds people to be patient.
Listen to the conversation on Kaya Biz:
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