Alexforbes addresses several misconceptions around the upcoming two-POT retirement system

Money, Markets and Masterminds

The two-pot retirement fund system is the most significant reform that the local pension fund industry has seen in recent years.

Besides getting a handle on the legal changes — including the Revenue Laws Amendment Bill and the Pension Laws Amendment Bill —each private and public fund will also have to amend its rules to accommodate the new regime.

The Financial Sector Conduct Authority - or FSCA for short - already allowed the funds that fall under its jurisdiction to start submitting their rule amendments from the beginning of the month. Rule amendments must be approved, or funds won’t be able to seed the savings pot or pay out withdrawals.

But if the red tape is not enough to keep administrators up at night as the 1 September deadline looms, industry experts have warned that the expected volume of withdrawal applications could add fuel to this fire.

Tackling misinformation about the new system will also be tricky. It is for this reason that I invited John Anderson, Executive: Solutions and Enablement at Alexforbes into the studio today to help navigate Citywire listeners through some of the details of this expected frenzy.

Some of the misconceptions cleared up in this episode include the fact that the new system is indeed starting on September 1, despite some beliefs to the contrary. The initial setup of the savings pot is not a one-time opportunity; it will be accessible annually under certain conditions. And Not everyone will receive the maximum R30,000; it’s based on 10% of their accumulated savings, subject to a cap.

Tune in to understand some of the finer details around the new regime and find out more about the importance of thorough preparation and clear communication as the industry transitions to this new system, which ultimately aims to improve retirement outcomes for its members.