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BL Premium reports that the SA Reserve Bank (SARB) estimates that the “two pot” retirement fund system could boost household disposable incomes by as little as R31bn or as much as R79bn in the fourth quarter of the year.
The maximum members might pull out of their funds in a high-withdrawal scenario is R100bn. Retirement sector players have been working overtime to prepare for the new system and to estimate how much their members will choose to withdraw from the “savings” portion of their funds once it kicks in on 1 September. President Cyril Ramaphosa signed into law the Revenue Laws Amendment Bill of 2023 into law in June, establishing a “two-pot” system that gives retirement fund members access to retirement savings without having to resign or cash out entire pension funds. The new system divides members’ pension and provident funds into a retirement or preservation pot, which makes up two-thirds and must stay in the fund until retirement, and a savings pot that can be withdrawn. It is expected to lead to a flood of withdrawals as members pull out up to a third of their funds, providing a boost to household spending and economic growth, as well as personal income tax collections. Retirement funds administrator Alexforbes expects a retirement sector outflow of about R50bn when a two-pot system is implemented in September. The SA Revenue Service (SARS) said it was ready to handle the tax component of the payouts. “We are working with other role players to streamline everything,” SARS stated.
- Read the full original of the report in the above regard by Kabelo Khumalo at BusinessLive (subscriber access only)
Get other news reports at the SA Labour News home page