National Treasury has published draft regulations to introduce what is called a “Two Pot” retirement fund system from 1 March 2023.
It is proposed that from March next year there will be a two pot retirement fund system whereby one third of contributions will go into an accessible savings pot with the remaining two thirds into a pot only accessible at retirement . Members will be able to access the savings pot once in any 12 month cycle without having to leave their jobs in order to access money from their retirement funds. This also applies to retirement annuities apparently. The new system will not apply to existing fund credits accumulated prior to March 2023.
Any withdrawals from the savings pot will be subject to tax – presumably as per the withdrawal tax table. However, it remains unclear at this stage if such pre-retirement withdrawals will affect the tax-free lump sum benefit at actual retirement.
Treasury had this to say about the new draft regulations:
The 2022 Draft Revenue Laws Amendment Bill contains key amendments on retirement reform to move towards a “two-pot” retirement system. The amendments enable South Africans to also save for non-retirement purposes (e.g. emergencies) via their retirement funds, whilst preserving more of their savings for retirement. These amendments aim to encourage members to preserve their retirement savings by making it more flexible to accommodate unforeseen pressures that members face during the span of their working life. It makes it possible for workers not to resign from their employment merely to access their retirement funds and would have assisted members during a crisis like the COVID-19 pandemic, when many employees faced reduced salaries or were not paid at all during that time.