Shift in legislation empowers individuals with unmatched flexibility.
The proposed two-pot retirement system is poised to be hailed as one of the most comprehensive and progressive retirement legislations globally, reflecting South Africa’s commitment to securing a more prosperous time in retirement for its citizens. With the potential to offer individuals three to four times more income upon retirement, this imminent change is set to reshape the retirement landscape and pave the way for a brighter financial future for all.
The significance of this feature cannot be overstated because it gives individuals the power to access a portion of their retirement savings pre-retirement while still ensuring a substantial nest egg for the future. Moreover, any unutilised funds in the savings pot at the time of retirement will translate into a one-third cash lump sum – which is poised to provide retirees with additional financial security.
As a testament to the far-reaching nature of this transformation, retirement annuities within the vested pot will not be able to be withdrawn until the age of 55 – adhering to current legislation. At the same time, pension and provident funds can be withdrawn entirely if an individual opts to resign from a fund before retirement, subject, of course, to the withdrawal tax tables.The proposed two-pot system envisions a pioneering approach to retirement stability.
Against a backdrop where 89% of South Africans will need to work, at least part time, after they reach retirement age; and where 40% of South African retirees will only be able to maintain their pre-retirement lifestyle by selling assets and depending on family – this revolutionary change in the retirement legislation will shine the light on the opportunity for a more optimistic time in the golden years.
Before making any transfers or withdrawals, however, it is important to request that your financial professional performs a tax directive simulation – so that there are no surprises as to the tax you will be required to pay. For more information, visit Gravitas Tax.
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