Alude Xuba: SA’s new Two-Pot pension system explained (available to read in isiZulu)

Starting September 2024, South Africa will implement the two-pot pension system, allowing public service employees to access one-third of their retirement savings before retirement and the rest upon retirement. This system aims to reduce indebtedness among employees while preserving retirement funds. Withdrawals are taxed and limited to certain conditions to manage debt and financial health.

Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.

Join us for BizNews’ first investment-focused conference on Thursday, 12 September, in Hermanus, featuring top experts like Frans Cronje, Piet Viljoen, and more. Get insights on electricity and exploiting SA’s gas bounty from new and familiar faces. Register here.

By Alude Xuba

The first day of September 2024 will usher in a new era for many public service employees with the introduction and implementation of the new two-pot pension system. This system is designed to help pension fund members access their savings in two ways: by (1) withdrawing one-third of their funds at any time before retirement, and (2) withdrawing the remaining portion at retirement. The latter will eventually be the retirement money.

The new two-pot retirement savings system in South Africa aims to preserve retirement fund investments until members retire while also allowing them access to a portion of their accumulated savings during their working years. Once the two-pot system is implemented, employees will be able to withdraw a small portion of their existing savings immediately. This is called “seed capital.”

A member will be entitled to one withdrawal per tax year, which will be taxed as gross income at the marginal rate. Any amount accessed in cash as a savings withdrawal benefit will be taxed at your marginal income tax rate, depending on your taxable income for the tax year, including the withdrawal amount. The minimum amount an employee or member may withdraw is R2000. The seed capital will be limited to 10% of the amount in your retirement fund account as of 31 August 2024, with a maximum amount of R30,000. To access a withdrawal benefit of R30,000, the value of your retirement fund account on 31 August 2024 needs to be at least R300,000.

Over the years, South Africa’s public service employees have seen pay increases inconsistent with the inflation and growth rate of the economy. They remain underpaid and heavily indebted. This situation contributed to the passing of the National Credit Act in 2005 to alleviate debt in the consumer and credit markets. Around 2014 and 2015, there was a false message spreading within the public service labour market, claiming that the government would tap into public servants’ pensions due to over-indebtedness and corruption. This caused panic and led to a significant number of resignations among public servants.

During this period, there were calls for investment managers to amend the prescribed assets to include investments in public infrastructure. This was misunderstood and contributed to the panic within the public service. Many public servants saw resignation as an opportunity to relieve their indebtedness by cashing in on their pensions to pay off critical debt obligations such as mortgage bonds, school fees, and credit cards. Some even went as far as fabricating divorces to cash out on their pension money.

The introduction of the two-pot system was long overdue and championed by various labor formations and organizations. Had this system been implemented earlier, it would have contributed significantly to reducing indebtedness and creating a credit-healthy society. The public service would have retained some of its best employees, and the social services purse would not have been as overloaded.

It still puzzles me why it took so long and so much effort to amend the applicable legislation and rules when the need for the two-pots system has been evident for a long time. On the other hand, it will be important to see the socio-economic impact of the two-pots system. Financial institutions and credit bureaus will need to closely monitor data to understand patterns in debt repayment and basic cash management.

What remains unclear is what happens to pension beneficiaries in the case of an early withdrawal of the money. Will they be entitled to their proportional share of the money, or will their entitlement be limited to the remaining pension sum after the initial cash-out?

Read the article in isiZulu

Usuku lokuqala lukaSepthemba 2024 luzoletha inkathi entsha kubasebenzi abaningi benkonzo yomphakathi ngokwethulwa nokusebenza kohlelo olusha lwemihlomulo yemali eyigugu lwempesheni. Lolu hlelo luhloselwe ukusiza amalungu omfundazwe wepesheni ukuthi athole izimali zawo ngezindlela ezimbili: ngokuthi (1) akhiphe ingxenye eyodwa kwezintathu (1/3) nganoma yisiphi isikhathi ngaphambi kokuthatha umhlalaphansi; kanye nokukhipha ingxenye esele uma esethatha umhlalaphansi. Leyo engxenyeni yesibili izoba yimali yomhlalaphansi.

Inhloso yohlelo olusha lwemihlomulo yokonga lwempesheni eNingizimu Afrika ukubhekelela ukugcinwa kotshalomali lwezimali zempesheni kuze kube yilapho amalungu esethatha umhlalaphansi, ngenkathi futhi evumela ukuthi athole ingxenye yezimali zawo ezisunguliwe phakathi neminyaka yawo yokusebenza. Abasebenzi bazokwazi ukukhipha ingxenye encane yezimali zabo ezikhona ngokushesha nje lapho uhlelo lwemihlomulo yemali eyigugu lwempesheni lusungulwa. Lokhu kubizwa ngokuthi “imali yokuqala.”

Ilungu lizoba nelungelo lokukhipha kanye ngonyaka wezintela futhi lizokhokhiswa intela njengenani eliphelele kumholo oshadile. Noma yimuphi umthamo otholakala ngemali njengensizakalo yokukhishwa kokonga uzokhokhiswa intela yakho yentela yomuntu ngamunye, ezoya ngemali yakho etholakalayo yentela yonyaka wezintela, kufaka phakathi inani elikhiphayo. Inani elincane umsebenzisi noma ilungu elingakhipha yi-R2000. Imali yokuqala izolinganiselwa ku-10% yenani eliku-akhawunti yakho yepensheni ngomhla zingama-31 ku-August 2024, neningi eliphakeme elingu-R30,000. Ukuze uthole inzuzo yokukhipha imali engu-R30,000, inani le-akhawunti yakho yepensheni ngomhla zingama-31 ku-August 2024 lidinga ukuba okungenani libe ngu-R300,000.

Eminyakeni edlule, abasebenzi benkonzo yomphakathi baseNingizimu Afrika bebebona ukukhuphuka kwemiholo engahambisani nesilinganiso sokukhuphuka kwamanani entengo kanye nokukhula komnotho. Basalokhu behola kancane futhi benemali eningi abayikweletayo. Lesi simo siphinde saholela ekudlulisweni komthetho we-National Credit Act ngo-2005 ukuze kuncishiswe izikweletu ezimakethe zabathengi nezikweletu. Ngonyaka ka-2014 no-2015, kwaba nomlayezo ongamanga owawusakazeka emsebenzini yomphakathi, uthi uhulumeni uzoqoqa izimali zempesheni zabasebenzi bakahulumeni ngenxa yokweqisa izikweletu kanye nenkohlakalo. Lokhu kwadala ukudideka futhi kwaholela ekutheni inani elikhulu labasebenzi bakahulumeni lishiya izikhundla.

Ngesikhathi lesi simo siphakathi, kwakukhona imikhankaso yokuba abaphathi bezimali balungise izimpahla ezibekwe phambili ukuze kufakwe utshalomali ezinhlelweni zomphakathi. Lokhu kwaqondwa kabi futhi kwaholela ekudidekeni emsebenzini womphakathi. Abasebenzi abaningi bakahulumeni babona ukuphuma kwezikhundla njengendlela yokukhulula izikweletu zabo ngokuthola izimali zabo zempesheni ukuze bakhokhe izikweletu ezinkulu ezifana nezikweletu zezindlu, izimali zesikole, nezikweletu zamakhadi okuthenga. Abanye baze bafake izicelo zokuhlukanisa ukuze bathole izimali zabo zempesheni.

Ukwethulwa kohlelo lwemihlomulo yemali eyigugu lwempesheni bekungamukelwe isikhathi eside futhi kube nesekelo ezinhlelweni ezahlukene zabasebenzi. Uma lolu hlelo belusungulwe kudala, belingaba nomthelela omkhulu ekwehliseni izikweletu futhi kwakha umphakathi onesikweletu esincane. Umsebenzi womphakathi ubungaqhubeka nokuba nabasebenzi abaphambili nabaphezulu, futhi imali yezinsizakalo zomphakathi ibingagcwalisiwe futhi ilayishwe kakhulu.

Kusangimangaza ukuthi kungani kuthathe isikhathi eside nokuzikhandla okukhulu ukuze kuguqulwe imithetho efanelekile nemithetho lapho isidingo sokulungisa nokuthuthukisa uhlelo lwemihlomulo yemali eyigugu lwempesheni besicace kakhulu. Ngakolunye uhlangothi, kuzobalulekile ukubona umthelela wezemnotho emphakathini yalolu hlelo lwemihlomulo yemali eyigugu lwempesheni. Izikhungo zezezimali nama-credit bureaus kuzodingeka ukuthi ziqaphe idatha eduze ukuze ziqonde amaphethini ekukhokheni izikweletu kanye nokuphathwa kwemali okuyisisekelo.

Okusasele kungaqondakali ukuthi kwenzekani kwabazuzi bempesheni uma kunezikhipho zemali zakuqala. Ingabe bazoba nelungelo lesabelo sabo semali, noma amalungelo abo azolinganiselwa enanini lempesheni elisele ngemva kokukhipha imali yokuqala? 

Read also: