At a recent conference, National Treasury’s Acting Director-General expounded on the two-pot retirement system, the governance of umbrella funds and changes to Regulation 28.

Ismail Momoniat, Acting Director-General at National Treasury, addressed the Pension Lawyers Association Virtual Conference in May with an update on retirement reform developments. He confirmed that retirement reform is alive and well, although there is still a need to consolidate the various proposals.

He focused on five main areas:

1. Two-pot system proposal

On the two-pot system proposal, which entails creating a savings portion and a preservation portion in each retirement “pot”, Momoniat highlighted this was necessary to prevent employees resigning in order to gain access to their retirement savings to pay off debt.

The proposal is to split contributions into two pots for all retirement funds:

One-third accessible savings pot and two-thirds retirement pot.
Two-thirds retirement pot subject to full preservation until retirement.
In practice, a member could withdraw once a year from their savings pot, subject to a minimum, but will incur the cost of withdrawal and a tax liability. Vested rights accumulated prior to implementation of the two-pot system will remain subject to the current rules.

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