Today's Labour News

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parliamentBL Premium reports that complications have arisen with proposed legislation vital for the implementation of the two-pot retirement system because it contradicts provisions in the Divorce Act.

This emerged from presentations by the Association for Savings and Investment SA (Asisa) and the Institute of Retirement Funds Africa (Irfa) to parliament’s standing committee on finance which is considering the Pension Funds Amendment Bill. The bill will allow pension funds to change their rules to accommodate the two-pot system, which comes into effect on 1 September. There is urgency that the legislative foundation for the system, namely the Revenue Laws Amendment Bill and the Pension Funds Amendment Bill, are promulgated as soon as possible so that retirement fund administrators can prepare for the new system by changing their systems and rules. Asisa’s Adri Messerschmidt told MPs that the Pension Funds Amendment Bill proposed a division of retirement fund assets on divorce in a different way from the Divorce Act, which had a trumping provision stating that the act superseded all other acts and the rules of any fund. The sharing of retirement funds on divorce would be less favourable after implementation of the system on 1 September for occupational funds, preservation funds and retirement annuity funds. Also, Messerschmidt said the allowable deductions for housing loans needed to apply across all three pots in the system, namely the vested pot; the savings pot and the retirement pot. A Treasury official said they would propose a trumping provision in the bill over the Divorce Act, but Messerschmidt pointed out that this would mean both the Divorce Act and the Pensions Fund Act would have trumping provisions.

  • Read the full original of the report in the above regard by Linda Ensor at BusinessLive (subscriber access only)

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