Lize de la Harpe, Senior Legal Advisor at Sanlam Corporate
Introduction
National Assembly published the Revenue Laws Amendment Bill, 2025 (“the 2025 RLAB”) on 13 December 2024.
The 2025 RLAB proposes certain changes to the Revenue Laws Amendment Act, 2024, which established the Two-pot system that came into effect in September of last year, notably:
- Conditions for members of provident funds and provident preservation funds who were over 55 on T-day to be excluded from the new Two-pot system, and
- Clarification on the date to be used for seeding when these members opt to partake in the new Two-pot system.
Exclusion of over 55s
In terms of the RLAA, provident fund members and provident preservation fund members who were 55 or older on 1 March 2021 (T-day) and who remained members of the same fund are automatically excluded from the Two-pot system unless they opt in to partake.
In essence, to be excluded, these members must remain members of the same fund.
The 2025 RLAB proposes deleting the reference to provident preservation fund members having remained a member of the same fund.
Seeding calculation date for over 55s who opt in
Both the Revenue Laws Amendment Act, 2024 and the initial draft of the 2024 RLAB state that provident fund members who were over 55 on T-day and who remained members of the same fund are automatically excluded from the two-pot system unless they to elect to partake.
These members have 12 months from the effective date of the Two-pot system to opt in.
Once the member elects to be included, the fund will have to seed 10% of their vested component (subject to a maximum of R30 000) to their savings component to make provision for immediate access. The concern to date has been what date must be used when doing this calculation.
The Revenue Laws Amendment Act, 2024 states that the fund must use the member’s fund value as at 31 August 2024 for this calculation, regardless of when the member opts in. The initial draft of the 2024 RLAB allowed the seeding amount to be calculated based on the fund value as at the end of the month in which the member opted in. Due to the severe time constraints that arose at the time (coupled with the disparity between regulatory clarity and the demand for system development to give effect to these changes), administrators proceeded with developing their admin systems on the basis as set out in the initial version of the RLAB.
However, the 2024 RLAB version as published on 1 August, reverted back to the wording as set out in the Revenue Laws Amendment Act, 2024 (i.e.: using 31 August 2024 as the date to calculate the seeding). Comments were raised on the impact hereof on administrators who had already developed their systems as per the previous version of the RLAB.
The 2025 RLAB proposes allowing funds the option to select whichever approach was communicated to their members and outlined in funds rules. Put simply: funds must use either 31 August 2024 or the last day of the month in which the election was made or as determined in the fund rules.
Conclusion
The deadline for public comment on the 2025 RLAB is 17 January 2025.
ENDS