Old mutual said that they are preparing for applications for the two-pot retirement system which comes into effect on September 1.
Old mutual said that they are preparing for applications for the two-pot retirement system which comes into effect on September 1.
Michelle Acton, Retirement Reform executive at Old Mutual said they are preparing to open applications for the two-pot system.
“Applications for withdrawals from the Savings Pot can only commence once we have opened our Savings Pot transaction capability, and this can only happen after we have updated all our pension administration systems, done all the seeding calculations and allocations and finalised our system integrations required. The new two-pot system requires significant new capability that is not currently required under the new pension system. As soon as we are ready to receive Savings Pot withdrawal claims we will communicate to members.”
Acton added that the Two-Pot Retirement System only impacts new retirement contributions from September 1, 2024.
“To start, a once off amount (called seeding capital) consisting of 10% up to a maximum of R30 000 of your existing retirement savings, will be transferred into the Savings Pot as an opening balance. The minimum withdrawal is R2000. Remember, any withdrawal will incur tax (at your marginal tax rate) as well as fees.”
Acton said that if a member has R250 000 in their retirement fund on September 1, then firstly the R250 000 is allocated to the Vested Pot.
“Then on or after 1 September 2024, 10% of the Vested Pot is transferred to the Savings Pot as an opening balance. That means in this example, R25 000 would be allocated to the Savings Pot and the balance of R225 000 will remain in the Vested Pot.”
Acton added that from September onwards, 1/3rd of all future contributions are allocated to the Savings Pot. “A member contributes R900 per month, R300 at the end of the month would be allocated to the Savings pot. Members can draw the balance in their Savings Pot, once per tax year.”
Professor Irrshad Kaseeram, from the University of Zululand’s Economics Department said that the tax rate for pension funds is whatever is the marginal tax of the pension contract holder.
“One ought to withdraw if they’re in serious difficulty for it will adversely affect their retirement income. Which means in their old age they will have to rely on their family and or the government once their pensions are depleted.”
The Mercury
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