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Understanding the tax implications of the SA's two-pot retirement system
Manage episode 418203060 series 3574125
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"Welcome to 'Money, Markets, and Masterminds,' - a Citywire South Africa podcast - that delves into the intricate world of finance, investment, and strategic decision-making.
If you're a fund selector or an independent financial adviser, looking for insights, analysis, and expert opinions to enhance your perspective, you're in the right place - here with me editor - Ruan Jooste.
The National Treasury of South Africa has proposed significant amendments to the country's retirement system over the last few years, and the introduction of a two-pot pension system was only one of them.
Initially planned for implementation in March last year, it is now anticipated to happen in September this year, however the date has not been set in stone by authorities yet.
Under the new system, retirement scheme members can access up to one-third of their savings before retirement. The remaining two-thirds will be preserved for after retirement.
In addition, Treasury proposed raising the amount initially accessible under this System from R25 000 to R30 000. How-ever, there are concerns regarding the potential consequences of this increase, such as higher withdrawal amounts and significant tax implications.
These issues were barely touched on in the recent budget review for the upcoming financial year.
So, there's a clear need for some serious conversations between advisers and their clients, the very contributors to these retirement products, on what the near- and longer-term implications of the proposed framework will be.
I invited Darren Burns - Head of Business Development at Graviton Wealth, which is part of the Sanlam group, to the studio today to help unpack some of the intricacies of these reform measures.
In his current role, Darren supports advisers to launch a business or grow their existing one. He is also responsible for developing retirement funds as a sustainable source of new business for IFA’S and their practices.
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