President Cyril Ramaphosa signs two-pot retirement bill

System comes into effect in September

21 July 2024 - 16:32
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President Cyril Ramaphosa. File photo.
President Cyril Ramaphosa. File photo.
Image: Esa Alexander

President Cyril Ramaphosa has officially signed the new Pension Funds Amendment Bill which will enable workers to have access to their pension funds once a year.

The two-pot retirement system officially comes into effect on September 1 and is aimed at cushioning the effect for financially burdened workers by allowing them to withdraw from their retirement funds. Presently, workers can only access their pension or provident fund when they resign or change jobs.

“One-third of retirement contributions will be split into a savings component and two-thirds into a retirement component. The ability to unconditionally access amounts from the 'savings component' will be provided without the member having to cease employment or having to resign. A member will be allowed to make a single withdrawal within a year of assessment,” explained presidential spokesperson Vincent Magwenya.

The two-pot retirement system is for any South African who has a pension fund, provident fund, retirement annuity or preservation fund. It excludes legacy retirement annuity funds, beneficiary funds, unclaimed benefit funds and pensioners.

It also excludes those who were 55 years or older on March 1 2021 and have remained a member of the same provident fund.

“The assets in the 'retirement component' will be required to be preserved until retirement [for example] withdrawals from this component can only be accessed by the member upon retirement as per the fund rules.

“Once a member has reached retirement age and retires, the 'retirement component' is to be paid in the form of an annuity (including a living annuity),” said Magwenya.

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