You are Here > Home > Podcasts > Listen: The proposed two-pot system for retirement funds

Listen: The proposed two-pot system for retirement funds

Aug 5, 2022

The proposed two-pot system for retirement fundsOn 29 July, National Treasury released draft legislation around early access to pension funds and the so-called “two-pot” system.

This draft legislation aims at addressing two key challenges facing retirement savings: improving retirement outcomes by introducing mandatory preservation; and providing access to retirement funds for emergencies prior to retirement.

The amendments aim to introduce a measure of flexibility around retirement products in order to encourage people to preserve their retirement savings. By allowing access to a portion of one’s retirement savings, the idea is that people won’t be incentivised to resign from their employment just to access their retirement funds in an emergency situation.

This system would have assisted people during a crisis like the COVID-19 pandemic, when many employees faced reduced salaries or were not paid at all during the national lockdown.

The document highlights that “the proposal does not include allowing immediate access to retirement funds, but rather moves to a system that can more adequately cater for emergencies in the future but should also increase preservation to improve retirement outcomes.”

The changes will affect all forms of retirement funds including company funds, umbrella funds, retirement annuities, and the Government Employees Pension Fund.

How will the two-pot system work?

In this podcast Maya (@mayaonmoney) speaks to retirement reform expert Rowan Burger about how the two-pot system will work.

Burger is head of strategy at Momentum Investments and chairs the social security standing committee at ASISA. He is on the retirement reform task team at Nedlac and has been part of the ongoing review of the retirement reform proposals.

Burger dispels some myths around early access to retirement funds, and explains how vested rights will affect your existing retirement assets.

  • Why you will not have early access to your retirement funds in March 2023
  • The introduction of mandatory preservation on two-thirds of contributions
  • What will happen to your existing fund benefits
  • How withdrawals will be taxed
  • How the two-pot system will work for GEPF members
  • Whether the date of March 2023 is realistic and when we are likely to see these changes


  1. What happens to my two third pot, if I have been unemployed for more than three years after working for a company for 23 years?
    If I am 45 years old and need money to survive but already exhausted my third pot. I also feel that the chances of getting employed are slim.

    • Remember this only applies to contributions after implementation. Most likely we would only see this come into practice in 2024. Any funds accumulated until then would be treated as it is now ie: no pots. For all contributions after implementation – then only one third is accessible before retirement. It is for this reason that one should not draw down the one-third unless it is for emergencies such as a retrenchment.

  2. Please elaborate further

  3. I am a GEPF member and would like to now if we will also be allowed to take a percentage of our money

  4. I feel with below inflation salary increases or no increases at all such a change will definitely assist the vulnerable working class who are becoming over indebted. My view is that it will be a good initiative however yhe tax implications are not indicated upfront on the one third.

    • The document released by National Treasury after this podcast was recorded, suggests that the one-third would be fully taxed.


Submit a Comment

Your email address will not be published. Required fields are marked *

Maya Fisher-French author of Money Questions Answered

Previous Articles

Pin It on Pinterest

Share This