National Treasury Proposed New Two Pot Retirement System

Proposed New Two Pot Retirement System For Retirement Savings

South Africa’s National Treasury has proposed a new Two-Pot Retirement System for retirement savings. This introduces partial compulsory preservation, while allowing some flexibility for emergencies where retirement fund members require access to their money before retirement.

The table below illustrates how the proposed system will work. More information will follow when National Treasury further refines and ultimately enacts the regulations.

Please ensure that payroll and Momentum have a valid mobile number and active email address to ensure that you are kept up to date with developments.

The proposed effective date for the Two-Pot system is 1 September 2024.

The Two-Pot System: Savings component from 1 September 2024

Your retirement savings will be divided into 3 components, a vested, savings and retirement component.
Different rules apply to each component.
You will still only have one retirement savings account in your company retirement fund, and it is important that your long-term financial goal for all three components remains saving for retirement.

OLD RULES	NEW RULES
Up to 31 August 2024	From 1 September 2024
Retirement savings protected in Vested Pot. Current rules apply. No further contributions paid into vested pot after 1 Sept 2024.	New rules apply to Savings Pot and Retirement Pot. All new contributions from 1 Sept 2024 will be paid into your savings and retirement pots.
Vested Component	Savings Component	Retirement Component
Current retirement savings up to 31/08/2024.	⅓ of your new contributions will go into the savings pot	⅔ of your new contributions will go into the retirement pot
10% of savings, up to R30 000 max to be transferred ONCE-OFF to savings pot on 31/08/2024.	Cash withdrawal allowed at retirement. Tax rules apply.	No withdrawals allowed before retirement.
	Cash withdrawal allowed, for emergencies before retirement. Tax rules apply. Minimum R2 000, no maximum.	You must buy a pension when you retire. Lump sum cash only if balance is less than R165 000. Tax rules apply.