The Minister of Finance published the much-anticipated Pension Funds Amendment Bill (B3-2024) on 30 January.
The purpose of the Pension Bill is to amend the Pension Funds Act (PFA) to insert certain definitions to provide for:
- the introduction of the savings withdrawal benefit;
- the appropriate account of a member’s interest in the savings, retirement, and vested components; and
- deductions that may be made.
Click here to download the Pension Bill.
The proposed amendments to the PFA follow from the publication of the Revenue Laws Amendment Bill (B39-2023), which establishes the two-pot retirement system. It is expected that the system will take effect on 1 September 2024, although we are awaiting the amendment to the Income Tax Act (ITA) by the Revenue Laws Amendment Act.
According to Parliament’s National Assembly and National Council of Provinces Meeting of Committees schedule (also published on 30 January), the Standing Committee on Finance (SCOF) is scheduled to meet on 6 February to receive a briefing by National Treasury on the Pension Bill.
Further, according to the Schedule, further meetings are scheduled for SCOF on:
- 12 March: public hearings on the Pension Bill;
- 19 March: responses by National Treasury to SCOF to submissions received on the Pension Bill; and
- 26 March: the consideration and adoption of SCOF’s report by the National Assembly on the clause-by-clause deliberations on the Pension Bill.
Although the schedule is subject to change, it appears there is at least the intention to have the Pension Bill finalised towards the end of March.
A question that has been posed several times in the retirement industry is whether it is possible for private and public sector retirement funds to implement the two-pot retirement system come Spring Day bearing in mind that we are yet to see the final legislation – that is:
- the ITA, as amended, which is the first step towards implementing the system;
- the final PFA, which is necessary for private sector retirement funds to give effect to the two-pot retirement system; and
- other Acts applicable to public sector retirement funds, such as the Government Employees Pension Law and the Transnet Pension Funds Act.
While the answer to this question largely depends on the legislative developments, several proactive steps can be taken in the meantime to assist with the roll-out of the two-pot system. These include:
- understanding the proposed amendments to the ITA and the PFA;
- trustee training;
- human resources training;
- careful drafting of rule amendments;
- amendments to benefit guidelines or brochures;
- amendments to service level agreements (administration agreements, actuarial agreements, and so on);
- amendments to benefit option forms; and
- amendments to housing loans or housing guarantee policies.
Deirdre Phillips is a partner at Bowmans in Johannesburg.
