The Standing Committee on Finance has recently confirmed a significant adjustment to the draft legislation governing the Two-Pot Retirement System. While these changes are officially listed as ‘proposed,’ there’s a high likelihood that they will be incorporated into the final Revenue Laws Amendment Bill, which is awaiting approval in the National Assembly. However, it’s crucial to emphasise that, as of the time of this article, the ultimate legislation remains pending and subject to parliamentary approval.

Here are the key changes:

1. Postponed Effective Date: The original effective date of 1 March 2024 has been postponed to 1 March 2025. This delay is in response to a request from the retirement fund industry, aiming to provide them with adequate time for system adjustments, staff training, and member education.

2. Seed Capital Increase: The seed capital amount is set to increase. It will now be calculated as the lesser of ten percent of the “vested component” or R30,000. This adjustment aims to alleviate the financial burdens faced by many retirement fund members, as requested by various labour organisations.

These modifications aim to ensure a smoother transition and alleviate challenges in the implementation of the Two-Pot Retirement System. Additionally, it’s worth noting that further changes to the system are anticipated in the coming year.

However, please keep in mind that the postponement of the effective date to 1 March 2025 has an important implication. As things currently stand, both the SARS Vision 2024 Monthly Tax Certificate Project and the Two-Pot Retirement System will ‘go live’ simultaneously on 1 March 2025, ushering in a new era in the retirement fund landscape.