The Association for Savings and Investment South Africa (Asisa) is adamant that its members need at least 18 months from the date on which the final legislation is gazetted to implement the two-pot retirement system.
National Treasury is pressing ahead with implementing the two-pot system in 12 months, on 1 March 2024, even though the draft legislation has not yet been finalised.
Read: Treasury presses ahead with launching two-pot system in March 2024
Although the implementation date of 1 March 2024 was announced during the Budget, National Treasury had already decided to move out “TP Day” in September 2022. The two-pot system was originally scheduled to be up and running on 1 March this year.
Treasury pushed out “TP Day” by a year after the retirement industry said it was unrealistic to expect fund administrators to have made all the necessary changes to their systems and processes by 1 March 2023.
In his Budget speech, Finance Minister Enoch Godongwana said the government intends to publish revised draft legislation on the two-pot system after further consultations.
Treasury has indicated that the legislation will be finalised by the Medium-term Budget Policy Statement, which is normally tabled in October. If Treasury adheres to this timeframe, the retirement industry will have less than six months to implement the system.
Old Mutual has previously said the retirement industry could miss the 1 March 2024 deadline if the reforms are not finalised in the first half of 2023.
It seems the retirement industry hoped, or assumed, that the revised draft legislation would be out for comment by now, or in its absence, that Godongwana would again push out the implementation date.
The draft legislation needs to address several outstanding issues, including
- Seeding: allowing members to transfer a portion of their existing retirement savings into the “savings pot”, from which they can make pre-retirement withdrawals;
- The treatment of defined benefit funds; and
- The treatment of “legacy” retirement annuity funds.
Asisa sticks to its guns
In a statement this week, Asisa reiterated what it stated in its submission to Treasury in February 2022, as well as during a presentation to the National Assembly’s Standing Committee on Finance in September last year.
It said the steps that will have to be completed before systems are in place to accommodate the two pots and the treatment of vested rights include changing the rules of retirement funds, developing new processes, developing new systems, training staff and advisers, and appropriate communication with retirement fund members.
Asisa told the Standing Committee on Finance that a rushed implementation posed the risk of creating errors, confusion, and unfair outcomes for members.
Read: Administrators, funds will need 18 months to prepare for two-pot system, says Asisa
“Our members indicated that the effective date should be no earlier than 18 months after the legislation has been gazetted. Only then will there be certainty around the details, which will be essential before systems, processes and communications can be designed,” Asisa’s statement said.
In response to stakeholder comments made to the Standing Committee on Finance, Treasury stated that “the two-pots system is a complex reform, and will require time to implement, and also require complementary measures to implement in a manner that is in the best interests of the members of retirement funds”, the statement said.
Asisa said it is awaiting a revised version of the Revenue Laws Amendment Bill and proposed amendments to the Pension Funds Act, which are necessary for the implementation of the two-pot system, following which Asisa will engage Treasury further on behalf of its members.
