One withdrawal per year allowed from your pension savings, under new 'two-pot' retirement rules

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After many years of consultations, Treasury has finally published proposed new legislation that will establish a two-pot retirement system in South Africa.

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 prevent South Africans from cashing out their retirement savings when they resign.

"The amendments enable South Africans to also save for non-retirement purposes (e.g. emergencies) via their retirement funds, whilst preserving more of their savings for retirement," Treasury said in a statement.

"These amendments aim to encourage members to preserve their retirement savings by making it more flexible to accommodate unforeseen pressures that members face during the span of their working life."

Treasury said the new legislation will also prevent workers from resigning to access their retirement funds.

The new proposal will mean that a member of a pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund will be able to make one withdrawal in any 12-month period – but that withdrawal may not be less than R2 000.

The legislation notes 1 March 2023 as a starting date for the new regulations. 

Interested parties have until 29 August to submit comments to Treasury.

The Actuarial Society of South Africa recently estimated that a two-pot system would triple retirement savings in South Africa. 

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