Navigating the path to equitable retirement in South Africa
08 Mar 2024
While the impending introduction of the Two-Pot Retirement System marks a significant milestone in addressing the reality that only six per cent of South Africans can currently retire comfortably, there are growing concerns about delays in implementation and whether South Africans have sufficient understanding of the system.
These issues were raised at an industry masterclass webinar hosted by LexisNexis South Africa with guests Matthew Parks from COSATU, Radesh Maharaj, a retirement planning specialist, and Keith Peter, Advice Manager at Old Mutual South Africa.
The Two-Pot Retirement System is garnering substantial public interest and support and is poised to balance the pressing need for short-term financial relief with the crucial objective of ensuring long-term retirement security.
Panel members said the true efficacy of this system hinges not only on its structural design but on a comprehensive understanding, engagement, and cooperation among all stakeholders – from policymakers and industry experts to employers, employees, and the public. This, they said, is not always the case.
The webinar also highlighted the necessity for meticulous preparation and robust legislative support to operationalise the concept effectively. Peter emphasised the importance of speedy legislative approval, the seamless integration of SARS systems, and the critical role of education in ensuring a smooth transition to this new paradigm of retirement savings.
Parks reflected on the system’s overarching benefit for South African workers but reinforced the imperative for all stakeholders to actively engage and contribute to the system’s successful implementation.
Maharaj stressed the importance of education, highlighting the distinction between retirement fund savings and short-term bank accounts and advocating for long-term savings perspectives.
He believes that when correctly implemented, the Two-Pot Retirement System will have a significant societal impact and expressed hope that such legislation would help address income disparities and alleviate poverty, urging a broader perspective in understanding the societal implications of retirement fund regulations.
Peter said that individual members accessing their funds must understand the long-term impact on retirement capital. He stressed the need for members to recognise that frequent withdrawals, even as low as R2 000 annually, could significantly diminish their retirement savings.
This perspective underscores the responsibility of the industry to ensure members comprehend the consequences of accessing funds regularly, thereby mitigating potential detrimental effects on their financial futures.
Maharaj referred to the stringent regulation of pension funds, highlighting oversight from the Financial Sector Conduct Authority and annual independent audits. He emphasised the accountability of administrators and the availability of a Pension Funds Adjudicator for members to address concerns about access or management of their retirement savings.
Along with Peter, he underscored the existing checks and balances in the retirement fund system, aimed at preventing corruption and ensuring transparency and fairness for members.
Recognising the magnitude of this shift and the paramount importance of informed participation, LexisNexis South Africa, reinforced its commitment to equipping all involved parties with the knowledge and tools necessary for a seamless transition.
The LexisNexis library platform stands as a testament to this commitment, offering instant access to updated legislation, in-depth commentary, and essential guides – a veritable beacon guiding stakeholders through the intricacies of this significant reform.
View the recording of the webinar here: https://pages.lexisnexis.co.za/exploring-the-two-pot-retirement-system
See also:
- Fraud can unravel dreams of retirement
- An employer’s right to change an employee’s retirement date
- What does the labour law say?
- Employee salary deductions
