WHAT IS A 2 POT RETIREMENT SYSTEM?

By Teboho Sekhosana

 


WHAT IS A TWO POT RETIREMENT SYSTEM?#how to file a Grievance, #employee rights during a strike #twopotretiremen 

The Two Pot retirement system is a significant reform aimed at helping South Africans access a portion of their retirement savings before retirement  without needing to resign  from their job. The system is designed to provide relief for individuals facing financial distress while still ensuring retirement preservation.


The reform divides a member's retirement  fund into three components:

1.The Two New Pots(Applies to New Contributions) 

Starting from the implementation date, new contributions will be split into two "pots".

(a) Contribution Split: If a member contributes 10% of their salary, 3,33% goes to the Savings Pot, and 6.67% goes to the Retirement Pot.

(b)) Fund Types: The system applies to Defined Benefit Funds, Defined Contribution Funds, Provident Funds, and Preservation Funds.


2. The Vested Right Pot(Applies to Existing Savings)

This pot contains all the retirement savings accumulated before the implementation date.

(a) Vested Rights Rule: Funds in this pot are subject to the old retirement fund rules. A member can still access these funds in full only if they resign from their employment.

(b) Taxation: If a member resigns and withdraws from this pot, the withdrawal is taxed using the withdrawal lump sum tax table.


3. Seed funding for Immediate Access

To allow immediate access to funds on the implementation day, a portion of the existing Vested Right Pot will be converted into the new Savings Pot-this is known as "seed funding"

(a) Conversion Amount: The seed funding will be the lesser of:

   . 10% of the Vested Right Pot's value.

   . A maximum of R25,000

(b) This R25,000(or 10% amount) is a once off injection into the Savings Pot and becomes immediately accessible.

Key Actions and Preservation

(a) To withdraw; members must contact their Fund Administrator(e.g Old Mutual, Liberty, ect)to request a withdrawal from the Savings Pot.

(b) Preservation upon Resignation: If a member resigns after the implementation date, they have three options

1. Withdraw the full amount from the Vested Right Pot(taxed under old rules)

2. Transfer the Savings Pot to a new fund or preservation fund(optional)

3. Must preserve the Retirement Pot by transferring it to a new fund or preservation fund.


By

Teboho Sekhosana

Director at SEKHOSANA TT LABOUR CONSULTANCY

084 436 1494  / 063 039 4468

sekhosanattlabourconsultancyla@gmail.com



 

My name is Teboho Sekhosana I'm an ex Numsa Shopsteward trained in Grievance and Case Handling. Political activists who has had a privilege to spend time in South America(Venezuela)

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