[READER QUESTION] 'Regarding the two-pot retirement system, Will employees be able to access money already accumulated in the current pot?' Munaf Mukadam from GMInvestmentsZA responds. Moneyweb TwoPotSystem
Regarding the two-pot retirement system, I would like to know if employees will be able to access money accumulated previously – or if they will only be able to access the money they will accumulate from 2024.According to the current draft, the two-pot system will not be applied retrospectively. In other words, members will not be able to access one-third of their retirement savings accumulated to date.
As the two-pot system will not apply retrospectively, members of pension and provident funds will therefore, on resignation, be allowed to access their full fund value that has been accumulated up to 1 March 2024, plus interest.The primary reason for introducing the two-pot system is to address two issues:
On the one hand, there is a need for more retirement fund preservation, but on the other hand, there is a need to allow people to gain access to their retirement fund without jeopardising their employment.The two-pot system will address both issues simultaneously and should achieve a fair balance between enhancing retirement fund preservation and allowing access to a portion of one’s retirement savings for emergencies.
Although it is called the two-pot system, it may be helpful to think about it as involving ‘three pots’ as depicted below:
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