The ACDP is aware that during that the COVID period, between 2 to 3 million South Africans lost their jobs, employees took salary cuts, many businesses were liquidated, and the South African economy took a huge knock.
Unlike many other developing nations, our economy has not grown at the levels needed to reduce the financial stress we face as a nation, and inflation has eroded the meagre salary increases many employees have received.
As a result, the two-pot retirement system was introduced by government. From 1 September 2024, 66% of your retirement funds will go into a retirement pot and 33% into a savings pot. Employees will now be allowed to access their retirement savings to provide some financial relief.
The ACDP, however, cautions that withdrawals from the savings pot should only be made for emergencies. It should also be noted that this withdrawal will be subject to tax and other administrative costs resulting in one receiving less than what was applied for. Additionally, a withdrawal from the savings pot will reduce the final total amount available at retirement and may result in a reduced standard of living.
The ACDP acknowledges that the two-pot system may bring some relief for those in financial distress but cautions against the abuse of the new retirement system.
