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Two-pot retirement system: Independent Economic Analyst

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By Lee-Yandra Paulsen

National Treasury has called upon the public to review the draft legislation concerning the two-pot retirement system, providing an opportunity for individuals seeking access to their retirement or provident funds.

During an interview with VOC Drive Time on Monday 12 June, Professor Bonke Dumisa, an Independent Economic Analyst, shed light on the matter. He explained that for over a decade, the labour component at the National Economic Development and Labour Council (Nedlac) has been expressing concerns about the limited access to retirement funds. This limitation affects individuals who require a portion of their retirement fund for various purposes, such as property extensions.

Dumisa said that after considerable deliberation, National Treasury has finally approved the implementation of the two-pot retirement system. However, under this system, members will only be able to access one-third of their retirement funds, while the larger portion remains inaccessible.

Furthermore, Dumisa stated that contributions made to retirement funds are fully tax-deductible. However, if funds are withdrawn prematurely, the previously deducted taxes would become payable. Consequently, this reduces the amount available for investment firms to invest, leading to potentially lower returns on investments.

It is essential to note that the proposed system is still subject to public scrutiny and further refinement. Treasury’s publication of the draft legislation allows the public to contribute their thoughts and recommendations.

VOC News

Photo: Pixabay

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