TWO-POT RETIREMENT SYSTEM: NO VOTE ON IMPLEMENTATION DATE

TWO-POT RETIREMENT SYSTEM: NO VOTE ON IMPLEMENTATION DATE

• 22 November 2023
• Parliament
• SA Legal Academy

Please note: This report has been edited to address a misunderstanding stemming from the fact that, during two separate virtual parliamentary committee meetings on 21 November 2023, members discussed the same Bill for different reasons.

Recent media reports alluding to the imminent commencement of a two-pot retirement savings system may have been premature. On 21 November 2023, both the National Assembly’s Standing Committee on Finance and the NCOP’s Finance Committee met virtually and separately to discuss the Revenue Laws Amendment Bill – with different outcomes.

The National Assembly committee meeting began at 09:00, with the NCOP committee meeting starting an hour later.

During each meeting, National Treasury Acting Head: Tax and Financial Sector Policy, Chris Axelson, explained the rationale behind delaying the Bill’s implementation to 1 March 2015. This was in the context of National Assembly committee clause-by-clause deliberations on the Bill, while the NCOP committee was simply briefed on its contents – in anticipation of the Bill being passed by the National Assembly and sent to the NCOP for concurrence.

Against that backdrop, the National Assembly’s Standing Committee on Finance did, indeed, agree to:

• change the proposed two-pot retirement savings system’s implementation date to 1 March 2024, and to
• reflect that change in its report to the House in anticipation of the Bill’s second reading.

However, the committee did not vote on the Bill. Neither did it vote to adopt a report for tabling in the House. This is because input from parliamentary legal adviser Frank Jenkins made it clear that:

• the committee may not change the implementation date until it has notified Finance Minister Enoch Godongwana in writing of its intentions
• in terms of legally binding procedures, the Minister is required to respond with comments within 14 days
• the Minister may disagree with the committee but may not overrule its decision, and that
• the committee report should reflect that process.

Media reports focused on these proceedings. Their headings were nevertheless misleading. ‘Finance MPs defy Treasury’s advice on two-pot retirement system’ (Business Day) tends to suggest that the tone of the meeting was adversarial, which was not the case. ‘Finance portfolio committee votes to implement two-pot retirement system in 2024’ (The Citizen) refers to a vote that was never taken and may not be taken until the Minister has expressed his views on the matter in writing.

SA Legal Academy’s original report questioning the accuracy of both articles focused on the NCOP Finance Committee's 21 November 2023 meeting – when only one member expressed concern about provisions in the Revenue Laws Amendment Bill making 1 March 2025 the implementation date for two-pot retirement savings.

As SA Legal Academy reported at the time, that member was the DA’s Dennis Ryder – who later thanked National Treasury Acting Head: Tax and Financial Sector Policy, Chris Axelson, for explaining reasons for the delay.

According to Axelson, both industry and the South African Revenue Service will need ‘a lot of time’ to prepare the system for the ‘substantial’ changes entailed. To ‘try and rush’ the process would not only be ‘risky; it would ‘undermine confidence in the entire system’. Noting several other policy reforms requiring similar pre-implementation preparation time, Axelson described the 1 March 2024 implementation date originally proposed in an earlier draft of the Bill as having been over ‘ambitious’.

At this stage in the process, it is not completely beyond the realms of possibility that the National Assembly’s Standing Committee on Finance is persuaded to propose a compromise amendment providing for a phased approach to two-pot retirement savings system implementation.

• YouTube video of NCOP Finance Committee meeting
• YouTube video of National Assembly Standing Committee on Finance meeting
• Bill
• Business Day article
• The Citizen article

Published by SA Legal Academy Policy Watch

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