South Africa’s National Treasury recently published the 2022 Draft Revenue Laws Amendment Bill, which contains key amendments on retirement reform to move towards a “two-pot” retirement system.
This proposal could split a person's pension into two separate buckets. One bucket will be preserved until retirement while the second bucket will allow for pre-retirement access during emergencies or extraordinary circumstances. This will result in one-third of savings into an account that can be accessible at any time, while two-thirds must only become available at retirement
Treasury explains the proposal could also enable South Africans to save for non-retirement purposes. They added that in circumstances like the Covid-19 pandemic, people could have access to the money if their salaries were reduced or not paid at all.
They believe this will encourage individuals to preserve their retirement savings by making it more flexible to accommodate unforeseen pressures or circumstances they may face during their working life.
“These amendments are the culmination of several years of consultations and engagements that took place between National Treasury, labour, and business stakeholders, and reflects input received from the public after the release of the discussion paper encouraging households to save more for retirement in December 2021” concluded Treasury.
The draft bill is now available for public comment. Once this process of public comments has been completed, National Treasury will discuss the public input with stakeholders to discuss the written comments on the draft bill.
Members of the public can submit their written comments to the National Treasury’s tax policy depository at [email protected] and SARS at [email protected] by close of business on 29 August 2022.
