The Outlook 2025 webinar hosted by Asset TV brought together a distinguished panel of experts to discuss the implementation of the Two-Pot Retirement System in South Africa. Among the panelists was Joey Sankar, Executive of Pension Administration at EPPF. He was joined by Nina Saad, Head of Corporate Portfolio Solutions at Automated Investments, and Brian Karidza, Head of Actuarial and Benefits Administration Services at the Government Employees Pension Fund (GEPF). The discussion provided valuable insights into the challenges and successes experienced by the pension funds and the broader retirement industry following the system's implementation.

A Timely and Complex Implementation

Joey Sankar opened the conversation by highlighting the significance of the Two-Pot System's implementation, which officially went live on 1 September. Despite initial delays and industry-wide challenges, EPPF welcomed the new legislation, recognising its importance in enhancing retirement savings for its members. Sankar emphasised that preparation was key, with extensive efforts focused on educating both members and employers to ensure a smooth transition.

Educational and Legislative Preparedness

According to Sankar, educating members and employers was a critical component of EPPF’s preparation. Understanding the implications of the system on defined benefit funds required a comprehensive communication strategy. Participating employers played a vital role in these educational sessions, helping to clarify the system's impact on retirement benefits. Translating the legislative requirements into actionable administrative processes was another major task. Sankar credited the collaboration of actuaries and industry experts for successfully defining calculations specific to defined benefit funds, which differ from standard defined contribution funds.

System Readiness and Execution

Internal readiness was a priority for EPPF, involving enhancements to both the contact centre and consulting teams to better assist members. System implementation was meticulously planned, with initial efforts geared towards a November launch. However, despite the shifting timelines, EPPF went live successfully on 1 September. Sankar proudly shared that the first payment under the new system was processed within 60 hours, marking a significant achievement.

Cost Considerations and Member Impact

One of the key topics addressed during the webinar was the cost implications of the system's implementation. Sankar explained that EPPF took a prudent approach by absorbing initial costs within the fund’s administration budget. This decision was made to protect members from immediate cost implications. However, the fund intends to monitor withdrawal patterns and may introduce cost considerations for repeat withdrawals to encourage responsible financial decision-making.

Collaboration Across the Industry

Sankar highlighted the remarkable collaboration within the retirement industry, including the involvement of the GEPF and other stakeholders. This cooperation was essential for overcoming implementation challenges and ensuring the system's success for members.

Insights from the GEPF

Brian Karidza from GEPF echoed many of Sankar’s sentiments, noting similarities in their experiences. However, as a larger defined benefit fund operating outside the Pension Funds Act, GEPF faced unique challenges. Karidza emphasised the need for legislative amendments to accommodate the Two-Pot System and the importance of extensive member education. Despite initial teething issues, GEPF managed to reduce its payment turnaround time and is now positioned to process savings withdrawal claims within 30 days.

Looking Ahead

Both Sankar and Karidza acknowledged that while the implementation phase posed challenges, the focus now shifts to understanding the long-term implications for members. There is a collective industry commitment to promoting preservation and helping members make informed financial decisions.

Conclusion

The Outlook 2025 webinar provided valuable insights into the implementation journey of the Two-Pot Retirement System. The experiences shared by EPPF and GEPF underscored the importance of collaboration, education, and careful planning in navigating this significant industry shift. As stakeholders continue to monitor and refine the system, the ultimate goal remains to empower members and secure their financial futures.