Marius Du Toit, Managing Director – Efficient Benefit Consulting
The retirement fund industry was for a second time, within a month, caught by surprise by proposals made and decisions taken regarding the two-pot system. The latest development was when the Parliamentary Standing Committee on Finance (Committee) rejected the National Treasury’s (NT’s) proposal to postpone the implementation date of the two-pot system to 1 March 2025. A revised Revenue Laws Amendment Bill was published on 1 November 2023 with the implementation date postponed to 1 March 2025.
This latest development now changes the effective date back to 1 March 2024, as originally planned. Final parliamentary approval and final legislation are needed before the new retirement system can be implemented, and time is starting to run out. This only creates confusion amongst various industry stakeholders and retirement fund members. The question remains: Are the administrators, Financial Sector Conduct Authority, and the NT going to be ready for the roll out on 1 March 2024? From the comments that we have seen, it is very unlikely.
What is next?
The Committee now needs to inform the Minister of Finance that they want the implementation date to be 1 March 2024. Upon reply from the Minister, who has 14 days to respond, the Committee will make a final decision on the effective date.
The Revenue Laws Amendment Bill is only expected to be finalised by the end of December 2023 or early January 2024, whilst changes need to be implemented and ready by 1 March 2024. This unexpected turn of events will undoubtedly cause headaches for administrators and funds alike. To complicate matters further, the industry is now expected to finalise the implementation of these changes without final legislation.
Although Efficient Benefit Consulting supports the new two-pot system, a hurried implementation can be more harmful to the retirement fund industry and retirement fund members than a properly planned and implemented approach.
We will follow the developments closely over the next couple of weeks and provide further updates.
This article provides information of a general nature and does not constitute financial advice.