Employee Benefits – Another update on the Two-pot implementation date

Sabir Bacus
Senior Benefit Consultant

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Double, double toil and trouble… Two-pot and its (political) expediency 

The to-ing and fro-ing of the Two-pot system implementation date appears to have come to an end.  It was reported that a compromise has been reached between the Minister of Finance and the Portfolio Committee on Finance in Parliament.  National Treasury was advocating an implementation date of 1 March 2025 and Government was determined for a 1 March 2024 inception.  The new proposed date is 1 September 2024.

Understandably the implementation date is of importance.  It represents, for members of retirement funds, the date from which they may gain access to a portion of their retirement savings (to lessen immediate financial distress), whilst remaining in employment.

In contrast, for the industry, this date is the zero hour for readiness.  The path to readiness is complex and multifaceted.

To kick-start this metamorphosis, the authorities must finalise and pass the enabling legislation.  Only once the new laws are promulgated, the industry then gear up operationally to meet the deadline.

At the top of the agenda for fund administrators is the requirement to upgrade their administration systems to cater for the new dispensation.  Integrated systems will also need to be upgraded.

Apart from a system upgrade to differentiate between the various pots, system-generated documentation will also need to be revised.

Fund rules must be amended to incorporate the new laws and the amendment must be registered with FSCA.  FSCA, in turn, must prepare to manage and process a considerable number of applications in a relatively short period.

SARS will need to adjust their systems to facilitate taxation. SARS anticipates a six-month period for an update to their systems.

Boards of trustees should evaluate the impact of the new laws and make the necessary changes where applicable, including informing members and relevant stakeholders of the changes.  A critical area of engagement with members is communication on the workings of the Two-pot system and the impact it will have on retirement savings.

Government has already revised regulations making member counselling compulsory.

The challenges of being ready for yet another moving part of South Africa’s already regulatory complex retirement industry within the next seven months are enormous.

GTC and the independent boards of trustees of the GTC umbrella retirement funds are working hard on all the issues within GTC’s domain to deliver by this prescribed date.

We invite you to discuss this with either your GTC retirement benefit consultant or one of the GTC MAPS team.