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TWO POT RETIREMENT SAVINGS SYSTEM: COMPROMISE IMPLEMENTATION DATE AGREED
- 04 December 2023
- Parliament
- SA Legal Academy
Members of the National Assembly’s Standing Committee on Finance have unanimously agreed to adopt proposals from Finance Minister Enoch Godongwana, which will see the two-pot retirement savings system implemented on 1 September 2024. The Revenue Laws Amendment Bill will be revised accordingly.
There were no discussions on the contents of the Minister’s letter, which was read out towards the end of a meeting held on 4 December 2023.
The new date is a compromise between the 1 March 2025 (as reflected in the Bill tabled) and a proposal from the committee that the new system should take effect on 1 March 2024.
In keeping with parliamentary procedural requirements when recommending changes to a money Bill, the committee sent a letter to the Minister on 21 November 2023, communicating its intention to bring the implementation date forward by twelve months. Also in keeping with those procedures, the Minister responded within14 days. This is noting that a Finance Minister may not overrule a committee’s decision to amend a money Bill but may nevertheless propose an alternative way forward.
As required, the Minister’s letter listed reasons for his reservations about the committee’s proposals. These included a reference to the Pension Funds Amendment Bill, which will deal with other aspects of the two-pot retirement savings system and was approved for tabling when Cabinet met on 29 November 2023.
According to the Minister’s letter, the Pension Funds Amendment Bill will provide for ‘the tax treatment of contributions to and withdrawals from eligible retirement funds under the two-pot system’. Consequently, the Revenue Laws Amendment Bill’s commencement date ‘cannot predate’ the Pension Funds Amendment Bill’s implementation.
Even if that Bill were to be tabled immediately and both Bills passed by 1 March 2024, more time would still be required for the South African Revenue Service and Financial Sector Conduct Authority to make the necessary changes to their systems and attend to related processes.
The letter also refers to the ‘direct negative market impacts’ likely to be associated with a period of accelerated asset disposal in order to meet the need for liquidity as withdrawals suddenly increase.
At the time of writing, the committee had yet to table its report in the House for a second reading of the Revenue Laws Amendment Bill – revised to reflect the 1 September 2024 implementation date now agreed. That reading is expected to take place when Parliament reconvenes after its long festive season recess.
- Minister’s letter
- Cabinet media statement
Published by SA Legal Academy Policy Watch