South Africa is eight weeks away from the most significant retirement reform in the country's history when the two-pot retirement system takes effect.
Under the two-pot retirement system, a member's contributions to a fund are split into a savings component that is accessible once in a tax year, and a retirement component.
For existing retirement fund members, there is also a third component the vested component containing the fund member's contributions up to 31 August.
The savings component will be initially seeded with the lower of 10% of the value of the retirement fund or R30 000 as at 31 August.
From there on, two thirds of any new retirement savings will be preserved in the retirement component, which can only be accessed once a member reaches retirement age.
Many South Africans have been eagerly waiting to access to a portion of their retirement money in the savings pot. But fund administrators point out that there are crucial things to bear in mind.
No immediate payouts
"One of the most important points to communicate is when their money will be accessible," said Michelle Acton, retirement reform executive at Old Mutual.
Acton heads up Old Mutual's two-pot reform across all its retail and employee retirement funds and has been involved in the planning and implementation from the word go.
"Even though the legislation goes live on 1 September, it doesn't mean funds may be able to pay out on that date as there are several steps to be implemented first. Fund administrators can only start doing the seeding calculations (for the savings pot) from 1 September onward."
The seeding calculation determines the initial amounts assigned to different components based on existing retirement savings. The amounts that will be allocated depend on the current amount of savings in each member's retirement account and their market value.
Bu hikaye The Citizen dergisinin July 13, 2024 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Giriş Yap
Bu hikaye The Citizen dergisinin July 13, 2024 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Giriş Yap
CHIEFS' BIG TALENT
The new Amakhosi head coach is showing a willingness to start trusting in younger players.
Arsenal retain hunger
Mikel Arteta saluted Arsenal's hunger as the gritty Gunners ignored the absence of Declan Rice and Martin Odegaard to clinch an \"ugly\" 1-0 win at bitter rivals Tottenham yesterday.
Piastri claims a tense Baku win
Oscar Piastri claimed an impressive second victory of his burgeoning career yesterday when he drove his McLaren to a well-judged triumph ahead of Ferrari's Charles Leclerc in a tense Azerbaijan Grand Prix.
No room for relaxing
Manqoba Mngqithi has issued a friendly warning to his dazzling array of Mamelodi Sundowns superstars that complacency will not be tolerated this season.
Austerity is wrong route
Belt-tightening means choosing not to invest in SA citizens.
Clear case for nuclear
Scientists, not lobbyists, must lead the conversation’.
This is how your interest rate is calculated
Economists expect that the South African Reserve Bank will cut the repo rate on Thursday, giving consumers a little more breathing room when it comes to their finances.
Saving for retirement at 50
South Africans become financially wiser as they get older, says expert.
Exploring the afterlife
The existential question that never bears an answer.
Scramble to help victims of floods
Hundreds killed in wake of Typhoon Yagi.