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South Africa: Reaching boiling point – updated FSCA Communication signals that the two-pot retirement system is almost ready 

6 May 2024
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Overview

  • Several legislative changes are being finalised ahead of the ‘two-pot’ retirement system coming into effect.
  • The Revenue Laws Amendment Bill, 2023, has been passed by both houses of Parliament and now awaits the President’s signature.
  • The Pension Funds Amendment Bill, 2024, was passed by the National Council of Provinces on 25 April 2024, with further amendments. It will now be reconsidered by the National Assembly.
  • Bowmans’ Two-Pot Readiness Pack, which will include the template rule amendments necessary to implement the two-pot system, will soon be available.

In its latest Communication 16 of 2024 (RF) (Communication), the Financial Sector Conduct Authority (FSCA) has updated its requirements for rule amendments to be submitted by retirement funds to give effect to the two-component retirement system (or more colloquially known as the ‘two-pot system’).

This follows developments in the legislation which have occurred since the FSCA’s earlier Communication 3 of 2024 (RF), which it has now withdrawn.

In particular, following extensive consultation and engagement, the Revenue Laws Amendment Bill, 2023 has been passed by both houses of Parliament and now awaits the President’s signature. The Pension Funds Amendment Bill, 2024 is also nearing the end of its legislative journey, with the National Council of Provinces passing the Bill on 25 April 2024, with further amendments, which will now be reconsidered by the National Assembly.

In terms of the Communication, from 2 May 2024 submissions of the rule amendments necessary to give effect to the two-pot system can now be made to the FSCA. Submissions made before 15 July 2024 will be processed on a ‘first-come-first-served’ basis and any submissions made after 15 July 2024 will only be processed once the first batch has been completed.

All rule amendments in respect of the two-pot system should be limited to the rule amendments delineated in the Communication and no other rule changes should form part of such submissions. Other rule revisions and consolidations will not be accepted during this period. 

A copy of the Communication can be accessed here.

In anticipation of the enactment of the legislation, Bowmans’ Two-Pot Readiness Pack will soon be available.  The Pack will include the template rule amendments necessary to implement the two-pot system, in line with the Communication as well as other key information, to assist retirement funds to ensure they will be ready to implement the two-pot system. Look out for further communications in this regard.