BL Premium reports that the Association for Savings and Investment SA (Asisa) said in Parliament on Tuesday that there was no way the retirement industry would be ready to implement Treasury’s proposed two-pot system for retirement by the envisaged 1 March 2023 implementation date.
Asisa’s Rosemary Lightbody said it would take at least 18 months from the date of gazetting of the final legislation for the industry to get systems in place to implement the proposed retirement reform, which it strongly supported. “We are saying that 1 March 2023 is simply not feasible. We do not support rushed implementation,” she indicated in a presentation to parliament’s finance committee. In terms of the two-pot system, two-thirds of contributions to funds will go into a retirement pot and a third into savings that will be accessible to one withdrawal a year by members. The aim is to enhance preservation for retirement while allowing some access for financial emergencies. Lightbody said that apart from the retirement sector having to prepare itself for the new system, including the adoption of new rules, the Pensions Fund Act would also have to be amended. Other areas of concern were how to deal with retirement contributions over the maximum tax deductible limit and defined benefit funds such as the Government Employees Pension Fund, which did not operate on the same basis as defined contribution funds. Defined benefit funds could not make one third of contributions fully accessible annually as that could seriously jeopardise the financial soundness of the fund. “The current drafting cannot accommodate defined benefit funds,” Lightbody stated.
- Read the full original of the report in the above regard by Linda Ensor at BusinessLive (subscriber access only)
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