By: Michelle Acton, Retirement Reform Executive at Old Mutual

President Cyril Ramaphosa has signed the Pension Funds Amendment Bill, amending pension-related legislation to enable the implementation of the recently legislated Two-Pot Retirement System, geared towards bolstering retirement savings.

Old Mutual Corporate welcomes this new law, as it allows the Financial Sector Conduct Authority (FSCA) to start approving rule amendments once gazetted. These amendments are critical for approval before funds can start paying any claims from 1 September 2024 according to Michelle Acton, Retirement Reform Executive at Old Mutual.  “There is misconception that funds must have created the pots before the 1st of September, which is incorrect. The law comes into effect on the 1st of September, after which funds can start implementing the pots and seeding them,” she adds.

Acton warns that despite this positive development, retirement funds and administrators still have a substantial amount of work to do before they will be able to pay claims, including ensuring administration readiness and integration with SARS. Members in a financial fix will need to be patient and not bank on the money coming on the 1st of September for other commitments.

Acton further explained, “Seeding calculations can only be conducted after the end of August, using the values from that month. The legislation allows for setting calculations after implementation, not necessarily on that date.

“This seeding calculation, which determines the initial amounts to be allocated to different 'pots' or accounts based on existing retirement savings, relies on the current amount of savings in each member's retirement account and their market value. This process could take several working days to weeks, depending on the rules set by each retirement fund.”

“It is also important to note that only members who have more than R2000 in their savings pot in September will be able to claim. Approximately 30% of our members in the Old Mutual stable will have less than R2000 in their savings pot and will not be able to claim. Therefore, it is important for members to assess their fund balance to see if they will qualify in September.”

Old Mutual Corporate is still waiting for the final process for the draft Revenue Second Amendment Bill to be finalised. “However, the signing of the Pension Funds Amendment Bill marks a significant milestone in South Africa's retirement landscape,” says Acton.

Old Mutual Corporate remains committed to guiding our customers through these changes and ensuring a smooth transition to the new system. We encourage all customers to stay informed and to review their retirement fund balances to understand how these changes will affect them,” she concludes.