Salt Employee Benefits

It’s not 2, it’s 4!!!

The Two-pot system process is full steam ahead with the president having signed the revenue amendment bill on 1 June 2024. As we see Funds and administrators hard at work to craft and submit rule amendments in preparation for 1 September 2024 it is important to understand practical implementation of two pot system.

Let’s go back to 2021, T-Day required that all member savings prior to 28 February 2021 be housed in a vested pot and all new contributions from 1 March 2021 be allocated to a non-vested component. The non-vested component is treated in the same manner as a pension fund at retirement with all benefits above the de minimis threshold being subject to one third cash withdrawal and two thirds to be utilised to purchase an annuity.

On 1 September 2024 we will add another two pots to every member record i.e. the savings and retirement pots. It is critical to note that these pots will be in addition to the two pots that members already have and are not replacing those pots. A member who has had consistent membership of a Fund prior to March 2021 will therefore have his savings split across four pots as detailed below:

  • Vested pot – all contributions prior to March 2021, eligible for full cash withdrawal.
  • Non-vested pot – all contributions post March 2021 to 31 August 2024 except for members who were 55 and over as at 1 March 2021.
  • Savings pot – to be seeded by both vested & non-vested components at 10%. All future contributions from 1 September 2024 will have 33% or 1/3 (one third) allocated to this pot which can be accessed once per tax year.
  • Retirement pot – this is a new pot which will have 67% or 2/3 (two thirds) of all future contributions from 1 September 2024 allocated and can receive transfers from other pots.

Of significant importance is that Funds and members understand that for those members who were over 55 on 1 March 2021 there will be an opt-in to activate the two new pots to be added. Where the member has not opted in, all contributions will be allocated to the non-vested pot which restricts the members access to the cash withdrawal at retirement. We continue to work with our clients and communicate to our members to ensure that the implementation of two pot system is seamless.

Best Wishes, Naz Seegers | COO