BL Premium reports that asset management group Allan Gray has warned of unintended consequences of “rushing” the implementation of the new pension regime, colloquially called the “two-pot” system.
The Treasury has set 1 March as the implementation date for the new system, which will see one-third of future retirement contributions allocated to a savings pot and two-thirds to a retirement pot. Allan Gray’s Richard Carter said it was important to have balanced legislation and sufficient time for industry changes. “There needs to be time for the industry to make the administrative changes and make them properly so that people retain their trust and confidence in the system. If you hurry the legislation through and rush the changes that need to be made, and you then cannot pay people what they expect, it can end up doing more harm than good,” Carter said. The Treasury first proposed changes to the retirement regime in 2022, with the aim of enabling limited access to retirement fund savings before retirement. The Draft Revenue Administration and Pension Laws Amendment Bill will allow members of retirement funds to access up to one third of their pensions savings once a year, in the event of an emergency, while preserving the other two thirds for retirement. It was reported in September that the retirement industry and trade unions were at loggerheads over the proposed implementation date for the new system, and the maximum amount that workers could withdraw when it came into effect. The industry wants the two-pot system to be delayed by 12 to 18 months after promulgation of the law so that it has time to prepare. Trade union federation Cosatu is adamant the implementation date should remain 1 March 2024.
- Read the full original of the report in the above regard by Kabelo Khumalo at BusinessLive (subscriber access only)
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