Retirement members can expect some proposed changes to two-pot retirement rules
This is a welcomed amendment...
There's no shortage of people from all walks of life who feel as though they need to save money for that rainy day.
But it seems over the past couple of years, the rainy days have come in abundance. And people are left feeling uneasy when it comes to their savings and investments.
When the National Treasury announced the updated published rules for the new retirement system in July, many people were left disappointed.
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Basically, the "draft regulations proposed three pots: one for retirement, one for savings and a "vested pot" to house all the money saved by the time the new system kicks in. You can withdraw money from the savings pot, but the retirement savings and the money in the vested pot remain off limits until you retire." (News24)
This has now changed due to the criticism received from labour unions as well as concerns of an influx in resignations.
The new proposal states that a once-off withdrawal from the vested pot will now be allowed, once the new system is in full effect.
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"Treasury said the government is open to allowing once-off access as long as it does not have adverse implications on the affected funds' liquidity and the costs of implementing these withdrawals are not imposed on members." (News24)
Which essentially means that retirement fund members will be able to access their savings without any repercussions, if this proposal is finalised into legislature.
When it comes to accessing your retirement and factoring in retrenchment, the treasury have proposed that members who have been retrenched can access a "limited income-based" withdrawal.
Which will be for a limited time frame and based on "annuity income with a maximum amount that can be withdrawn per year."
In case you don't know what annuity income means, it basically means receiving a constant source of income for an individual who can’t live without it.
This condition for members who have been retrenched come with a set of conditions though.
One such being that members should be able to prove that they don't have any other means of income.
But the pot at the end of the rainbow could be that the Treasury are understanding to the dilemma that many people are facing in South Africa. Besides the unemployment rate being high, the fact is that retrenchment is beyond their control.
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