In a country where many face increased financial instability in retirement due to a lack of savings, government’s proposed ‘two-pot retirement system’ remains earmarked for implementation from 1 March 2024.
The system will allow you to access a portion of your retirement savings for emergencies, while ringfencing the remainder for your retirement. However, while draft legislation around this was widely expected to be released today, this did not happen. Instead, the Budget Review makes vague reference to “forthcoming draft legislation” later this year.
The new two-pot system would have to allow for member-initiated claim functionality because, for the first time, members will have to register their claims without going through their employer. This is likely to require member engagement through an automated digital platform; the retraining and capacitating of entire new call centres; fraud and risk prevention measures.
Finance minister Enoch Godongwana flagged four areas of retirement reform that needed “additional work” — a proposal for seed capital, legislative mechanisms to include defined benefits funds in an equitable manner, legacy retirement annuity funds and withdrawals from the ringfenced retirement savings if you are retrenched and have no alternative income.
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