South Africa’s new two-pot system could be the first step in driving economic growth.
Up until now South Africans have been allowed to withdraw their entire pension or provident fund when leaving a job. This has left many with no savings at all when they get to retirement age., which came into effect on 1 September 2024, will introduce a form of enforced saving. The new regime will ensure that a significant portion of retirement savings will be retained and only accessible on retirement.
There is no reason to believe South Africa can defy this economic reality. Learning from others, a compulsory pension scheme could be a powerful driver of South Africa’s transition. is a mandatory system. Employers must contribute to a fund a minimum percentage – currently 10.5% – of ordinary time earnings for all employees over 18.
There are certain circumstances, including financial hardship and specific compassionate grounds, under which an employee may access their super early.Chile’s pension system was established in 1981, spearheaded by José Piñera during the military regime of Augusto Pinochet. The system is , transformed the country’s previous pay-as-you-go system into one where individuals accumulate savings based on mandatory contributions of 10% of gross wages.
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