Ronald King – Head: Public Policy and Regulatory Affairs at PSG Wealth

Firstly, we agree with the Actuarial Society of South Africa that providing access to a portion of the funds, while requiring the remainder to stay invested, will result in a bigger portion of the actual fund available by the time you reach retirement.

The issue is that when people need money, they resign to access the full retirement fund and end up using all of it which puts them in a worse position, with no funds left to access.

Secondly, in the past, many investors would’ve had to be persuaded to invest in retirement products, whereas now that there’s a portion accessible, it makes the product more attractive.

We do, however, foresee a lot of additional admin on the bigger funds to manage the initial rush to access the fund seeding, as well as the annual management of withdrawals,  which might have an impact on the cost of some of the funds.  There’s also still uncertainty on exactly how the fixed benefit fund will manage this transition, but this is yet to unfold.

In conclusion, PSG is widely supportive of the two-pot retirement system and believes it will have a positive effect in offering flexibility for fund members to access their retirement savings in case of emergencies.

ENDS