LIze de la Harpe, Senior Legal Advisor: Regulatory Unit at Sanlam
Introduction
The Revenue Laws Amendment Act, 2025 (2025 RLAA), which was promulgated on 24 December 2025, amended the Revenue Laws Amendment Act, 2024 (2024 RLAA), which established the Two-pot system. One of these amendments relates to the exclusion criteria applicable to provident preservation fund members who were over 55 on T-day.
What is T-day?
Let’s first recap. 1 March 2021 – commonly referred to as T-day – refers to the changes implemented by the Taxation Laws Amendment Act of 2020 which changed the treatment of provident fund and provident preservation fund benefit options at retirement.
As of 1 March 2021, members of provident funds and provident preservation funds are no longer allowed to take their entire retirement benefit in cash when they retire from the fund. They too, as in the case of pension fund members (and retirement annuity fund members), are limited to 1/3rd in cash with the remaining 2/3rds being used to purchase an annuity.
However, members of provident funds and provident preservation funds who were 55 years and older on T-day were entirely excluded from the annuitization requirements, provided they remain members of the same fund in which they were members of at T-day.
Exclusion of over 55s from Two-pot
In terms of the 2024 RLAA, provident fund members and provident preservation fund members who were 55 or older on T-day and who remained members of the same fund are automatically excluded from the Two-pot system (unless they opted in to partake within 12 months of the effective date of these changes). However, to be excluded, these members must remain members of the same fund.
The 2025 RLAA has amended the definitions of “retirement component” and “savings component” set out in the 2024 RLAA by deleting the reference to provident preservation fund members having remained a member of the same fund.
Simply put – the requirement that a member who was over 55 at T-day must still be a member of the same fund in order to be excluded from the Two-pot system no longer applies to members of provident preservation funds.
Conclusion
It is important for members of provident funds and provident preservation funds who have so far remained excluded from the Two-pot system to get financial advice on the impact of subsequent transfers to ensure they make informed decisions.
ENDS
