Member regulatory update: Release of the Two Retirement Reform Discussion

Member regulatory update: Release of the Two Retirement Reform Discussion

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Dear Member,


In this bulletin, we provide an update on the long-awaited discussion paper on retirement reform containing the much talked about “Two pot” retirement system which was published by National Treasury on 14 December 2021. In summary the discussion paper is about the Treasury’s proposals for a two-pot retirement system to cater for preservation and access to retirement funds in cases of financial need.


The paper proposes the previously announced “two-pot system” aimed at boosting household savings by increasing preservation before retirement while introducing more flexibility through partial access to retirement funds. Two-thirds of the benefit would have to be preserved until retirement and one third could be withdrawn at any one time, thereby avoiding the need for workers to resign from their jobs to gain access to their retirement savings. 


Regarding retirement annuities (RA), Treasury said that if they were not included in the two-pot system and no access was permitted before the age of 55, as is now the case, then there would be no way to assist individuals in financial distress. Including RAs in the two-pot system would mean that pension funds, provident funds and RAs will all be identical in terms of tax treatment, pre-retirement preservation and post-retirement preservation. The Treasury also proposed including all defined benefit funds, such as our Fund, in the two-pot system since they were already required to value benefits before retirement and already make large preretirement pay-outs to employees who resigned or were retrenched.


The current standpoint:


  • The overall intention of these proposed changes is to encourage more saving and preservation of savings for retirement.
  • These proposed changes will be applicable to active members. Pensioners will not be impacted as they are already in receipt of their retirement savings therefore nothing should change for them.
  • This is a discussion paper, it has not been made into law yet. Some aspects of it might change before it is made final.
  • Comments from the public are requested to be submitted to Treasury before 31 January 2022.


Should you require any further information, please contact our call centre or speak to any of our Retirement Fund Consultants. Click here to access their contact details.



Eskom Pension and Provident Fund

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