South Africa’s private retirement industry that manages about R3.27 trillion in assets will change completely on 1 September when the two-pot retirement system is implemented. While pension funds are working to get ready, many consumers only have a vague idea of how it will work.
“That is why we recommend that regulators allow only annual withdrawals, with a free once-off withdrawal and one free withdrawal every five years. Any further withdrawals should be subject to an administration fee. Remember also that every withdrawal will be taxed at your marginal tax rate.”However, in the long run, NMG believes the move could actually benefit consumers, as it will prevent people from having to take out expensive short term loans.
Jaya Leibowitz, manager of the retail legal team at Allan Gray, says it is critical to understand that the go-live of the system hinges on many factors, including:the Financial Sector Conduct Authority being able to timeously approve fund rule changes;Leibowitz explains that from the date of implementation of the two-pot system, all contributions to provident, pension and retirement annuity funds will be split into two...