We have been receiving some queries on the ability of members to access their retirement funds for purposes other than when their employment is terminated and when members go on retirement.
This circular letter serves the purpose of informing members of the progress on these policy changes that is currently being considered by the National Treasury. The policy under consideration by Treasury proposes a two-pot system, a “savings pot” and a “retirement funding pot”. The policy proposes further that those members belonging to the retirement fund may withdraw any amount from the savings pot, which is not subject to any conditions, but which would be subject to normal tax treatment. The policy further suggests that one withdrawal could be made in any 12-month period, the minimum withdrawal amount would be R2000. No withdrawals can be made from the “retirement pot” and the individual would be required to purchase an annuity with the full amount when they elect to retire.
All the current provisions for each existing fund will continue to apply to retirement interests earned before implementation date – these values will be referred to as the “vested pot”
For example, if a member of a pension fund were to resign in 5 years, they would still be able to withdraw the full amount of their “vested pot” from their pension/provident fund upon resignation (which would be the value in the fund on the day immediately prior to implementation date plus any growth on that amount), or be able to transfer the “vested pot” to a pension/provident/preservation fund, where they would have a once-off withdrawal available to them at any time before retirement.
The different vested rights provisions as per legislation that was affected from 01 March 2021 for provident fund members will also apply, where members who were over the age of 55 on 1 March 2021 would still be able to contribute to that provident fund and not be required to annuities (take out an annuity policy) those amounts at retirement.
On retirement, the previous provisions will apply to the “vested pot,” where individuals of retirement annuities or pension funds or pension preservation funds can withdraw 1/3 as cash with the remainder being required to purchase an annuity.
Please take note that these policy changes ARE BEING CONSIDERED BY THE NATIONAL TREASURY and the process to enact these policy changes IF AGREED TO BY PARLIAMENT CAN TAKE YEARS BEFORE IMPLEMENTATION.
Members are advised to NOT get their hopes up that this policy change is going to happen soon; it may not happen at all (depending on whether Parliament approves the changes or not).
Furthermore, if these policy changes are approved through Parliament, it may be years before it potentially becomes enacted.”
Esteemed greetings
C Van Vuuren
GENERAL SECRETARY: UNTU
