LIVE UPDATE | MPs insist two-pot system be implemented on 1 March 2024

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The Scof meeting ended at noon.

The National Assembly's Standing Committee on Finance (Scof) has rejected the proposal to move the implementation date of the two-pot retirement system to 1 March 2025 and has insisted on an implementation date of 1 March 2024. When the committee met on 25 October, National Treasury proposed moving the implementation date out by a year following calls from the retirement industry that it needed more time to put the systems in place for the new system. It amended the draft legislation accordingly. But at the first occurrence of "1 March 2025" when the revised Bill was being read today (21 November), the chairperson of Scof, Joseph Maswanganyi (ANC), halted the reading of the legislation and queried the new date.

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Chris Axelson, Treasury’s deputy director-general for tax and financial sector policy, repeated the reasons for moving the date. These include the extensive work required by the industry to establish and test the systems and procedures required to implement the two-pot system, which will enable fund members to make one withdrawal annually from their retirement pots (components). The South African Revenue also needs time to put systems in place for the two-pot system. Axelson said the initial timeline was “very aggressive”. He echoed the industry's concerns that a rushed implementation could result in "mistakes" that would be detrimental to members.

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But MPs from the ANC, DA, and EFF were firmly opposed to moving the implementation date to 1 March 2025. It seems some MPs believe Old Mutual and Alexforbes have declared they are ready to implement the two-pot system on 1 March 2024. Moonstone has reached out to both companies for their official position in this regard. Axelson told MPs that Old Mutual and Alexforbes agree the system should be delayed by a year. As the Association for Savings and Investment SA has pointed out, whether one or two administrators are ready is immaterial, because the two-pot system will necessitate the transfer of retirement money across all eligible funds, which, essentially means all funds that receive contributions (except for "legacy" retirement annuities).

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In the result, the consensus among MPs is that the implementation date must remain 1 March 2024. Those entities that are not ready by then will be given a grace period of 12 months to implement the system. It seems MPs envisage that entities that are not ready will approach National Treasury for extensions beyond 1 March 2024.

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There is a procedural matter that may yet result in MPs changing their mind - as unlikely as it seems. The 2023 Revenue Laws Amendment Bill is a Money Bill. The Committee must therefore inform the Minister of Finance of its intention to amend the legislation (that is, the implementation date) and provide him with 14 days to respond. The Minister cannot override the Committee's decision, but his response may convince MPs to agree to the implementation date of 1 March 2025.

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MPs accepted National Treasury's proposal to raise the cap on the seeding amount by R5 000 to R30 000. This means that each retirement fund (unless excluded from the system) must transfer 10%, but no more than R30 000, of the value of a member's savings on 29 February 2014 from his or her vested component (or pot) to to his or her savings component (pot). The purpose of seeding is so that members will have money in their savings pot that can be withdrawn immediately when the system is implemented.

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While MPs were considering the Committee's report on the Bill, some MPs' attention was much exercised by National Treasury's decision to accept the industry's proposal that provident fund members who were 55 years and older on 1 March 2021 will, by default, be excluded from the two-pot regime. They must explicitly choose to opt in. This is a reversal of the position in the draft legislation, which is that provident fund members who were 55 or older on 1 March 2021 are automatically included the two-pot system, unless they choose to opt out. It took some time for the MPs to grasp that these retirement fund members were not being summarily excluded from the two-pot system but will have the choice to opt in.

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Moonstone has reached out to the Association for Savings and Investment South Africa for comment on Scof's decision.

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The Scof meeting ended at noon.

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7 thoughts on “LIVE UPDATE | MPs insist two-pot system be implemented on 1 March 2024

  1. We can’t wait any longer. This is our money and these financial institutions must not want to double or triple their interests at our expense. We’re the contributors.Otherwise come elections,we’ll show the ruling party flames during voting.

  2. March 2025 is too far for many of us. Even March 2024 is far. We cannot wait any longer. I am sorry the administrators should find a way out, this is not rocket science.

  3. I support the scof decision to reject this overfed and over previledged , faceless monsters called retirement industry who are doing all they can to block us access to our hard earned money by bringing all sorts of unneccesary excuses to put us on a delibarate suspense with the hope that perhaps the regulation will dissapear. all they are saying is nothing else but to be spiteful and insulting to us considering how long they have being made aware of this new regulation for them to cry foul of their systems now. We need them to release our money as soon as yesterday, no excuses.

    1. Exactly, they want to maximize their profits using our hard earned cash

  4. The retirement industry bosses have always known that the implementation date is fast approaching but did nothing. Now they want to shift the goal posts again. If they are to be granted the postponement, next year this time they will be singing the same tune that they need more time. Let people access their monies.

  5. The date needs to be 01 march 2024 we have waitied far to long for this we are battling
    the documents need to be signed so wew can take out 30K the first of march we are drowing in debt this will bring a little financial relief 01- march 2024 was promised.

  6. We cannot wait any longer , this is our money that we invested, We cannot allow the capitalist to make profits through our hard savings , investing offshore, enriching their families.. This is a national OUTCRY , we need access to iur savings , is long overdue… Or else WE are not going to vote in 2024 election. Finish and KLAAR!

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