The introduction of the two-pot retirement system has triggered a wave of withdrawal applications, prompting concerns over tax liabilities and the need for improved financial education.
As the two-pot system rolls out, fund administrators are receiving a wave of withdrawal claims, highlighting the financial squeeze many are feeling.
Administrators may be in for a ‘windfall’ of R500 million to R1 billion a year in future tax years, says Keystone Actuarial Solutions.
In this video interview, Rudolph Geldenhuys, the FPI Financial Planner of the Year, shares how financial planning goes beyond technical expertise.
One of its four proposals is to allow members to transfer up to a third of their vested savings to their savings component.
With 748 applications approved and only 98 pending, the Authority says it’s on track to finalise all outstanding matters by the end of the week.
Avoiding the tax hit is one of the reasons retirement fund members should have an emergency fund.
The exemption will apply pending the finalisation of the consultation process on the draft amendments to Conduct Standard 1.
South Africa has the potential to boost its savings rate and secure a more stable source of funding for fixed investments, essential for driving economic growth.
Commentators did not raise any significant concerns in their responses to the draft conditions, the FSCA says.
A request for a tax directive will be declined if a member is not a registered taxpayer or has outstanding returns.
Members should find out whether they will be eligible to withdraw money from their savings components.
If a fund cannot follow the standard allocation methods, it must apply for FSCA approval to use an alternative, reasonable method.
The type of fund to which a member belongs may improve or undermine the preservation of retirement fund assets, says Allan Gray.
It is accompanied by three brochures that unpack different aspects of the two-pot system in more detail.
As the two-pot retirement system goes live on 1 September, intermediaries must prepare to guide clients through the new structure.
Economists assess the possible impact of the reforms on household consumption, real fixed investment, inflation, government debt, and GDP growth.
Notifications
