The key elements of the new system, which went ‘live’ on 1 September 2024
SOUTH AFRICA’S retirement fund industry will be undergoing significant changes this year. The two-pot retirement system went live on 1 September 2024, and it will affect pension, pro-vident, retirement annuity (RA), and preservation funds.
Why implement a new system?
1. To provide limited early access to retirement fund money for emergencies
The Covid pandemic caused widespread financial hardship, with many South Af-ricans battling to meet their essential living costs. This highlighted the impor-tance of having a mechanism in place whereby retirement fund members who are in dire need can tap into a portion of their retirement savings during their working life.
Under the old system, provident and pension fund members can only access their benefits before retirement by resigning from their employment, or if they are retrenched. Members of RAs were worse off if they require emergency financial support, as they had no access to their retirement assets before age 551.
2. To ensure long-term preservation
Many members of retirement funds chose to …
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