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PENSION FUNDS AMENDMENT BILL SIGNED INTO LAW
- 21 July 2024
- New Legislation
- SA Legal Academy
Please note: 1) On 24 July 2024, the Act was gazetted. It is not yet in force; 2) On 26 August 2024, a proclamation was gazetted confirming that the Act will come into effect on 1 September 2024.
According to a recent Presidency media statement, the Pension Funds Amendment Bill has been signed into law as the next legislative step in the process of implementing two-pot retirement savings on 1 September 2024. As has been regularly reported, this new system will give the members of retirement funds access to a portion of their savings without having to resign or cash out the entire fund. This is expected to ensure that the largest portion of an individual’s retirement savings is preserved for its intended purpose.
Passed by Parliament in May 2024, the Bill’s ‘D’ version provides for the tax treatment of two-pot retirement savings as prescribed in the Revenue Laws Amendment Act, 2024.
To that end, among other things the Presidency statement refers to sections of the new piece of legislation requiring pension funds to ‘amend their rules, adjust their investment portfolios and prepare administrative systems’ in anticipation of pension fund members applying to access portions of their funds from 1 September 2024.
On that date:
- one-third of retirement contributions will be allocated to the fund’s savings component and two-thirds to a retirement component
- the savings component of a fund ‘will be available for withdrawal at any time before retirement’:
- regardless of whether the fund’s member has retired or resigned, and
- by way of a single withdrawal of at least R2000 per fund or contract within the year of assessment, noting that
- such withdrawals will be taxed at the applicable marginal tax rate.
Only on reaching retirement age will the member of a fund have access to its retirement component by way of an annuity.
At the time of writing, the Pension Funds Amendment Act had yet to be gazetted. As a result, it is not clear if the Act is already in force.
- media statement
- Pension Funds Amendment Bill’s ‘D’ version
- Revenue Laws Amendment Act, 2024
Published by SA Legal Academy Policy Watch
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