Pretoria, South Africa – President Cyril Ramaphosa has signed into law the Revenue Laws Amendment Bill of 2023, introducing a groundbreaking “two-pot” system for retirement savings.
This new system aims to provide South Africans with emergency access to their retirement funds without the need to resign or cash out their entire pension.
Key Features of the Two-Pot System:
- Two-Pot Structure:
- Savings Pot: Allows access to funds before retirement during times of financial distress.
- Retirement Pot: Preserves contributions until retirement, ensuring long-term security.
- Vested Component: Houses historical retirement benefits accrued before 1 September 2024.
- Flexible Access: Members can access the savings component for emergencies while preserving the retirement component for future needs.
- Balance Between Security and Flexibility: The system is designed to address both immediate financial needs and long-term retirement security.
Purpose and Benefits:
- Immediate Financial Relief: Enables individuals to access part of their retirement savings during crises without compromising their entire pension.
- Preservation of Funds: Ensures long-term savings are maintained, striking a balance between current financial challenges and future security.
- Responsive to Crises: The reform is particularly relevant in light of financial challenges experienced during events such as the COVID-19 pandemic.
Statements from the Presidency:
President Ramaphosa highlighted the importance of this reform, stating:
“While we are continuing the task of growing our economy to create more opportunities for all South Africans and reduce the financial vulnerability affecting many individuals and households, the new retirement system offers protection and dignity to those who need it the most to overcome financial stress.”
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PRESIDENT RAMAPHOSA ENACTS LAW ALLOWING EMERGENCY ACCESS TO RETIREMENT FUNDS
President @CyrilRamaphosa has signed into law the Revenue Laws Amendment Bill of 2023, which establishes a “two-pot” system that gives members of retirement funds access to retirement savings without…
— The Presidency 🇿🇦 (@PresidencyZA) June 1, 2024
