TREASURY’S PROPOSED ‘TWO-POT’ RETIREMENT SYSTEM

On Friday July 29, National Treasury released its annual set of draft legislative changes to

South Africa’s tax acts. Significantly, they contain Treasury’s proposals for its so-called “Two-Pot” retirement fund system, first raised in finance minister Enoch Godongwana’s Budget speech in February. Under the proposed “Two-Pot” system, your retirement savings will be divided into two “pots”. The “savings pot” (one-third of your savings) will be accessible for emergencies, but the second “retirement pot” (the remaining two-thirds) will be available only at retirement. This means that you will no longer have access to or be able to cash in your entire retirement savings each time you change jobs.