Two pots – don’t bank on getting access to your money in March

Laura du Preez | 28 November 2023

Laura du Preez has been writing about personal finance topics for more than 20 years, including eight years as personal finance editor for two leading media houses.


Retirement fund members should not bank on getting access to their retirement savings on March 1 next year - the date now likely to be legislated for the implementation of two-pot retirement system.

There are hurdles that may not be cleared in time – in particular, the South African Revenue Service (SARS) may not have enough time to set up systems to issue directives on how much tax must be deducted from any savings you withdraw.

SARS told Smart About Money it was too early to say if it would be ready, as engagements are still underway.

Retirement fund administrators say they can only be ready to process requests for withdrawals from the newly created savings pots, if SARS is ready to issue tax directives and the relevant legislation is approved in time.

The legislation, which has yet to be passed by parliament, currently provides for members’ future retirement contributions to be split one third for a savings pot you can access before retirement and two thirds that must be preserved until retirement.

The savings pot will be seeded with a once off 10% of your savings on the day before the new system is implemented – up to a maximum of R30 000. As long as the amount in your savings pot exceeds R2 000, you will be able to access it immediately.


Fund rules hurdle

Before any part of the two-pot system can be implemented and members allowed to withdraw from the savings pot, however, every one of the thousands of funds affected needs to amend their rules to enable this and the Financial Sector Conduct Authority (FSCA) needs to approve those rule changes.

Zareena Camroodien, departmental head of fund governance and trustee conduct at the FSCA, says funds will only be able to submit their rule amendments to the FSCA once the Revenue Laws Amendment Bill and Pension Funds Amendment Bill have been assented to by the President and come into force.

She says the FSCA is preparing to have additional staff to process the rule amendments from March 1 2024 and will focus only on two-pot enabling rule amendments for an expected three months.

Guidance for rule amendments is expected to be published in December 2024, she says.


Laws still not in place

Rules cannot be changed yet, because the legislation is not yet in place. The Revenue Laws Amendment Bill still needs to go to the National Assembly and the National Council of Provinces and amendments to the Pension Funds Act haven’t even been tabled in parliament yet. Parliament goes into recess on December 8.

John Anderson, executive for solutions and enablement at AlexForbes, says there doesn’t seem to be political backing for a delayed implementation of the two-pot system, so the implementation date is likely to stay as March 1 2024.

He does not expect the amendments to the Pension Funds Act or the rule amendments will be stumbling blocks to implementation, but if SARS is not ready to process tax directives, then no withdrawals from the savings pot can be paid, he says.

The lack of finality on the Pension Funds Act amendments increases uncertainty for defined benefit funds and could delay the allocation of savings for members getting divorced, he says. Fund rules have, however, in the past been changed after legislation is amended, he says.


Administrators expressing doubts

Depending on whether SARS is ready or not, AlexForbes is aiming to be ready on March 1 on a best-efforts basis, Anderson says. Only once SARS finalises the process for obtaining tax directives can administrators develop the necessary systems to obtain these and test how this will work, he says. 

AlexForbes has put a rapid response team in place to fast-track the necessary changes but will only implement if it is comfortable that everything is in place to ensure secure, reliable service to members, Anderson says.

Michelle Acton, retirement reform executive at Old Mutual, also says without critical information from SARS on the requirements to process early withdrawals, Old Mutual cannot complete the modification of its systems to handle these transactions.

Acton says Old Mutual is concerned about meeting the 1 March deadline. She says Old Mutual had anticipated in 2022 that it would be ready for the two-pot system, but this was on condition that the relevant legislation was finalised expeditiously. It is now almost the end of the year and the legislation is still not finalised, hindering Old Mutual’s ability to fully prepare for the system’s implementation, she says.


Delayed withdrawals


  • The original implementation date was March 1 2023.
  • In 2022 it changed to March 1 2024.
  • In November, National Treasury proposed moving the date to March 1 2025 when it tabled the Revenue Laws Amendment Bill.
  • Members of parliament’s Finance Committee insisted the date be changed back to March 1 2024.
  • The Minister of Finance now has to be informed of the change to the tabled bill and be given 14 days to comment. The Finance Committee must then reconsider.
  • The bill must then be voted on by the National Assembly.
  • Thereafter the National Council of Provinces must vote on the bill.

When insisting on the March 1 2024 implementation date, Joseph Maswanganyi, chairman of parliament’s finance committee, said “the modalities of how to approach retirement fund administrators” would be up to the Minister of Finance.

Anderson says this leaves the door open for some mechanism to be introduced for funds and administrators to implement the two-pot system when they are ready within a set period after 1 March 2024. This mechanism could be in the form of an exemption from the two-pot legislation for a set period, he said. 

Adri Messerschmidt, senior policy advisor at the Association for Savings and Investment South Africa (ASISA) whose member companies include retirement fund administrators, says ASISA and its members believe that it is “unreasonable” to expect full implementation by 1 March 2024, given the uncertainty about the final enabling legislation and the complexity of the administration changes.

Even if the March 2024 date goes ahead, it is unlikely that fund members will be able to access their savings on that date, Messerschmidt says.


Self-administered funds worried

The Government Employees Pension Fund says it is working to ensure that all necessary rule amendments and compliance requirements are met by the implementation date, but can’t comment on SARS’s capabilities or timelines, a spokesperson for the fund says.

The spokesperson says the fund is not impacted by the Pension Funds Act amendments, as the fund operates under its own legislation.

Two large retirement funds for mineworkers also highlighted the challenges of the current situation.

Frans Phakgadi, principal officer of the Mineworkers’ Provident Fund, says the uncertainty around implementation date has created anxiety for the industry and the fund.

The fund had deprioritised work on the two-pot system in favour of other important projects when it seemed implementation would be delayed to 2025.

It’s a difficult stop-start affair and the self-administered fund will have to assess its readiness and the impact on resourcing next month, he says.

Mike Mitchley, chief operations officer for the Sentinel Retirement Fund, says if the March 2024 implementation date goes ahead, the fund will be as ready as it can within the limitations of not knowing the exact requirements or processes for rule amendments and tax deductions.

The fund will not be ready as efficiently or risk aversely as it would have hoped to be, he added.


It won’t be perfect

Anderson says if the legislation and tax directives can be in place early in the new year, then some funds and administrators could be ready – but there is the risk that everything will not be “perfect”. 

He says administrators who started development work early, despite the uncertain legislation, are most likely to be ready but funds or administrators that have been waiting for final detail before starting development, are highly unlikely to be ready.

With such large changes, it is preferable to have sufficient time to test systems before making services available to members, but the ability to do such detailed testing will be limited, Anderson says.

If some funds and administrators are ready to implement before others, then some members may be frustrated because they have to wait while other members are able to withdraw from their savings pots, Anderson says.


Member confusion

Aside from systems, rules and tax directives being a challenge, member education and awareness is critical to the success of this new system, Acton says.

Anderson says already there is a lot of misinformation and misunderstanding of the new system. Recently, some fund members said they were contemplating resigning from their jobs before 1 March 2024 to access their retirement savings because they believed from 1 March 2024 they will only be able to access R30 000. 

This is not correct – as all members will still have the right on leaving a fund to withdraw savings made before the new system becomes effective.