Liquidity and tax are growing concerns for retirement fund managers
THERE SEEMS no getting away from it—the two-pot system will open the door to a flood of withdrawal claims as the savings pot is split from the retirement pot.
Make no mistake, this is a big concern, as it’ll weigh on both the investment allocation decisions, and the liquidity management of pension fund members.
But how bad will this be, really?
“We expect a 90% to 100% increase in withdrawal claims,” says Jonathan Sierra, corporate product specialist at 10X Investments. This will put pressure on fund managers’ claims processing administration, as well as SARS’ ability to issue tax directives to funds.
In a move to appease labour unions—which are unhappy with the fact that government wants to see more retirement savings preserved for the long haul—National Treasury proposed that the savings pot of members be seeded with 10% of current members’ fund credit, up to a maximum of R25 000.
In practice, this will mean …