The Two-pot System might not launch when you think…
10 Apr, 2024

Jaco Wasserfall, CEO – Benefit Counsellor



South Africa’s much-anticipated two-pot retirement system might not launch on 1 September 2024.


When the two-pot system was announced, the first launch date was 1 March 2024. Then National Treasury proposed a postponed date of 1 March 2025 after pressure from the industry. Parliament and treasury then compromised with a new date of 1 September 2024. The whole industry is scrambling to meet this deadline, but I think a lot of that effort might be spent in vain.


Legislative Hurdles


The two-pot system’s smooth implementation relies on crucial legislative changes. Three key amendments are currently making their way through the parliamentary process but face an uphill battle to meet the September deadline.

Revenue Laws Amendment Bill: This bill plays a pivotal role in ensuring the tax treatment of contributions and withdrawals aligns with the two-pot structure.  Without this amendment, tax implications for individuals and retirement funds would remain unclear.

Pension Funds Amendment Bill: This bill addresses the regulatory framework for private sector retirement funds. It needs to be passed to empower these funds to implement the two-pot system within their structures.

Lastly, the Government Employees Pension Law will need to be amended to cater for members of the public sector’s retirement funds.


Parliamentary Time Crunch


Elections are fast approaching, billboards are popping up, posters covering the lampposts and candidates campaigning throughout South Africa, some even visited the ZCC church meeting in Limpopo over easter, and soon elections will take over our lives. The election date is set for 29 May 2024.

The looming conclusion of South Africa’s sixth parliament in mid-May throws a spanner into the two-pot system’s implementation date. There are a limited number of seatings scheduled for parliament between now and mid-May and I fear that members of parliament are much more concerned with their own futures after the election than with retirement fund members who eagerly await the implementation of the two-pot system.

The big question is how important of an electioneering tool the two-pot system is to the encumbered government? I believe this is the critical question. If the two-pot system is critical to success at the polls in May, then I believe that the current parliament will do everything in its power to get the needed bills approved.

If the implementation of the two-pot system is not critical to election success, then the proverbial can (or pot) will be kicked down the road and become the problem of the newly elected parliament.

Even if two-pot is critical for election success there is still a lot of work to the done and time is quickly running out.

In the event that the bill stands over for approval by the newly elected parliament the deadline of 1 September 2024 will have to be reconsidered. The first seating of a new parliament will be somewhere in June and new priorities will need to be discussed and agree on.

Let’s assume that two-pot is top priority and get approved at the very first meeting. That only leaves two to three months for implementation and industry will need more time.


Industry Needs Time to Adapt


The two-pot system’s success hinges not just on legal changes but also on adaptations within key industry players.

Is SARS prepared for the influx of claims that we foresee? Updated systems and training of employees are essential to ensure two-pot claims are processed efficiently.

Similarly, retirement funds are required to amend fund rules, adjust investment strategies and update systems to sufficiently service claims. Funds may already submit their revised rules, but these rules cannot be signed off until the required laws have been passed.


With all that needs to happen from both a legislation and implementation viewpoint, I doubt that we will see the two-pot system implemented on 1 September 2024.







@Jaco Wasserfall
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