Policy: Working of two-pot retirement plan questioned

The Association for Savings and Investment SA (Asisa) is opposed to the Treasury’s proposal that a portion of accumulated assets be transferred to the accessible pot in the proposed two-pot system for retirement funds. A Business Day report says while the association strongly supports the proposed two-pot system, it has told the Treasury that the assets accumulated by retirement fund members prior to the system coming into effect should not be included in the accessible pot. The new system must start from scratch as from the effective date, it said. However, if the Treasury accepts the Asisa view, it would mean the amount available for withdrawal would be extremely small at the beginning of the system and the accessible pot would only build up over time. The Treasury suggested that 10% of accumulated savings, or a maximum of R25 000, be transferred to the accessible pot when the new system took effect. But Asisa senior policy adviser Rosemary Lightbody said Asisa did not agree with this as it may result in a run-on retirement funds and this could create liquidity problems. This would also place severe strain on fund administrators’ capacity. Lightbody said, however, that the old rules governing funds before the commencement of the new system should still apply to accumulated savings, which would mean workers would still be able to gain access to all the savings built up by resigning from their jobs. The incentive to do so would decline as the amount in the accessible pot increased.