- The proposed implementation date for the two-pot retirement plan is September 1, 2024.
- The new date comes after MPs were unhappy that the Treasury Department delayed the implementation date to March 2025 instead of the original March 2024 implementation date.
- The issue is scheduled to be debated in parliament on Wednesday.
- For more financial news, visit: News24 Business Top Page.
The Treasury and parliament’s standing committee on finance have reached a compromise on the introduction of the so-called two-pot retirement scheme, with a new start date of September 1, 2024.
The two-pot system allows people to access a third of their pension savings before they retire.
A date of March 2024 was originally proposed, but the Treasury later postponed it to March 2025. But unsatisfied MPs appealed to Finance Minister Enoch Godongwana last month, asking for an earlier date.
Read | Treasury wants to delay ‘two-pot’ retirement plan until 2025
The new dates were proposed in Mr Godongwana’s letter read to the committee on Monday.
Mr Godongwana highlighted several concerns regarding the March 2024 implementation date, including the list of key laws and amendments to the retirement benefits regulations.
Mr Godongwana said in the letter that the Pension Fund Amendment (PFA) Bill, which would allow amendments to the retirement provisions, has not yet been tabled in Parliament. The bill needs to be tabled before the effective date of the Revenue Law Amendment Bill (RLAB) and the implementation of the two-pot retirement plan.
The Minister also stressed that the Fund Regulations would also need to be amended and submitted to the Financial Sector Conduct Authority (FSCA) for registration before any superannuation scheme could be introduced.
“The FSCA can have its internal systems ready to accept amendments to the Fund Regulations from 1 March 2024, but approval will take approximately three months from receipt of the draft regulations,” he said in the letter. ” he said.
“I have 1,324 retirement allowances. [that] All companies will be required to submit revised regulations for registration and approval. ”
he added:
The delay is frustrating both for Retirement Fund members who had hoped to have some of their retirement fund savings available by March 1, 2024, and for members of the Standing Committee on Finance who have been discussing the issue. I am aware of this. In the last two years. However, the concerns I have raised indicate that it is highly unlikely that a smooth restructuring of the retirement system will be implemented by March 1, 2024.
The committee voted in favor of the new date.
EFF’s Mzwanele Manyi said the minister had made “good points” and the party supported his recommendations. Other MPs, including the DA and ANC, also supported the recommendation.
The committee’s chairman, Joseph Maswangany, told News24 that the matter has been referred to parliament and could be considered on Wednesday. However, Maswangany stressed that a final decision on the implementation date had not yet been finalized.
“The committee has no decision-making authority.” [for the implementation of the two-port retirement system]. “The issue has been requested for discussion on Wednesday,” he said.
South Africans are currently able to withdraw their full taxable pension savings upon retirement, but this means that many people reach retirement age with little or no capital.
Through the new system, people will be able to access a portion of their retirement funds available through a ‘savings component’. One-third of your retirement contributions are allocated to the ‘savings part’ and two-thirds of your contributions are allocated to the ‘retirement part’ which must be used to purchase an annuity upon retirement.