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Pension Funds Adjudicator says two-pot retirement system rules are still misunderstood

Details

pfaThe Citizen reports that although the two-pot retirement system has been running for just more than a year, many people still do not understand the rules and the fact that pension funds cannot make changes to help specific members, despite the tight financial position they might find themselves in.

This system splits contributions into three components, namely the vested pot, the savings pot and the retirement pot. Many people are eager to access the savings pot, but current rules limit withdrawals to a minimum of R2,000 per tax year, up to the maximum amount in the savings pot, and no more. Withdrawals are taxed at marginal income tax rate and if money is owed to SARS, the withdrawal may be reduced to pay debt to the taxman first. Many people were left with R0 because the whole amount available was swallowed up by unpaid tax. Naheem Essop, deputy Pension Funds Adjudicator, advised. “Despite a substantial education drive by the retirement funds industry around its implementation, some misunderstandings persist and led to complaints lodged with the Office of the Pension Funds Adjudicator (OPFA).”

Essop recently dismissed two similar complaints from fund members when he found that in refusing multiple withdrawals from the savings pot, or a withdrawal from the vested pot, the funds rightly ollowed their own rules as well as national legislation. The two-pot retirement system allows members to access a portion of their retirement savings before retirement without resigning from their jobs.

  • Read the full original of the report in the above regard by Ina Opperman at The Citizen
  • Read too, Adjudicator backs funds in two-pot withdrawal disputes, at Moneyweb


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