South Africans will be able to access one-third of their retirement savings throughout their career, while two-thirds will only become accessible on retirement.
When South Africans resign, the reform is intended to prevent them from cashing out their retirement savings.
The amendments allow South Africans to save for non-retirement purposes (such as emergencies) through their retirement funds while retaining more of their savings for retirement,” Treasury said in a statement.
“These amendments aim to encourage members to save for retirement by making it more flexible to accommodate unforeseen pressures that members face over the course of their working lives.”
According to the Treasury, the new legislation will also prevent employees from resigning in order to access their retirement funds.
According to the new proposal, a member of a pension fund, a pension preservation fund, a provident fund, a provident preservation fund, or a retirement annuity fund may make one withdrawal in any 12-month period, but that withdrawal cannot be less than R2 000.
The legislation specifies March 1, 2023 as the start date for the new regulations.
Interested parties have until August 29 to provide Treasury with comments.
According to the Actuarial Society of South Africa, a two-pot system would triple retirement savings in South Africa.
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