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Fin24 reports that fund managers expect a wave of cash-strapped South Africans to withdraw up to R25,000 each from their pension savings when the new two-pot retirement system comes into effect next year.
Michelle Acton of Old Mutual says the group anticipates more than one million members within all the Old Mutual retirement funds coming forward to claim. "We have done market testing and when speaking to members, the majority of middle and lower-income members confirmed they would come forward and claim," said Acton. Millions of households are finding themselves with their backs against the wall, battling to make ends meet amid soaring inflation, higher interest rates and an economy on the brink of recession. They are expected to take advantage of new regulations to cash in when the current 1 March 2024 deadline arrives for the new two-pot system. The new system means South Africans will be able to access one-third of their retirement savings throughout their career, while two-thirds will only become accessible on retirement. The reform is meant to deter South Africans from cashing out their retirement savings when they resign, and is also aimed at preventing workers from resigning to access their retirement funds. From March 2024, members of retirement and provident funds, as well as retirement annuities, will be able to withdraw a once-off R25,000 or 10% (whichever is lesser) of their existing savings. Allan Gray director Richard Carter expects many South Africans will go for this option. But, he does not expect the mass withdrawals will cause a liquidity problem as they will most probably amount to less than 1% of total pension fund assets in SA.
- Read the full original of the report in the above regard by Nick Wilson at Fin24
- Read too, Race against time for ‘two-pot’ pensions, at Financial Mail (subscriber access only)
Get other news reports at the SA Labour News home page