Jaya Leibowitz, Allan Gray's retail legal team manager. Image: Businesstech
(The Post News)- South Africans have withdrawn billions from their retirement savings since the introduction of the two-pot system. However, the new legislation aims to clarify key misinterpretations that emerged after its commencement. The two-pot system was passed into law on September 1, 2024, and aims to assist retirement fund members in tapping into their savings during times of financial distress.
Allan Gray has reported that it has processed nearly 25,000 savings component withdrawals from its five retirement funds, with an average withdrawal amount of R14,000. The National Assembly has recently passed the 2025 Revenue Laws Amendment Bill, which introduces slight adjustments to South Africa’s two-pot retirement system.
According to Jaya Leibowitz, Allan Gray’s retail legal team manager, the 2025 Revenue Laws Amendment Bill does not make major structural changes. “It seeks to clarify ambiguities and correct technical drafting issues present in the Revenue Laws Amendment Act of 2024 and the Revenue Laws Second Amendment Act of 2024,” she said.
For example, the current legislation requires that deductions from member accounts under Section 37D of the Pension Funds Act be taken proportionally from all three components of the account. However, maintenance claim deductions were mistakenly left out. The new Bill corrects this by including the relevant section of the Act, ensuring that maintenance claims are covered.
Another clarification sorts out the confusion over provident preservation fund members older than 55 on March 1, 2021, who remain excluded from the two-pot system unless they opt in. The 2025 Bill also clears up uncertainty over the date used to calculate initial seeding amounts for those opting into the system. Leibowitz stated that the date to calculate the seeding amount is “August 31, 2024, or the last day of the month in which the election was made, or as may be determined by the rules of the fund.” Allan Gray has chosen the August 31, 2024, value and will continue doing so until August 31, 2025.
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