National Treasury is urging pension fund members to seek trustworthy financial advice to help consider the implications for withdrawals from their savings.
This comes after President Cyril Ramaphosa recently signed into law the Pension Funds Amendment Act (31 of 2024).
“Fund members should also note that administration costs and tax at marginal rates will be deducted from such withdrawals. Members will lose out on all related future growth and the retirement benefit originally intended for those funds,” National Treasury said on Tuesday.
The signing into law of the Pension Funds Amendment Act ushers in the last part of the significant amendments required to implement the two-pot system, commencing on 1 September 2024 after proclamation by the President.
The Pension Funds Amendment Act provides for certain amendments to the Pension Funds Act, 1956, the Post and Telecommunications-related Matters Act, 1958, the Transnet Pension Funds Act, 1990 and the Government Employees Pension Law, 1996, which are necessary to enable retirement funds, including public sector funds, to implement the two-pot reform.
These changes follow the related amendments to the Income Tax Act, which are contained in the Revenue Laws Amendment Act (12 of 2024).
“Retirement funds and trustees are now in the process of aligning their fund rules with the changes to the acts and should be communicating with fund members about these rule changes and processes to be followed for savings benefit withdrawal claims,” Treasury added.
Fund rule amendments still need to be submitted to the Financial Sector Conduct Authority for approval before implementation.
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