In this edition of our blog, we will look at the first component of the two-pot retirement system, namely the vested pot.
In the past members of pension-, and / or provident funds in financial distress often resigned to access their share of the fund. This was not possible for retirement annuities, except if the fund value was R15 000 or less. Furthermore, retirement annuity fund members could only retire from the fund from age 55 onwards.
Your Vested Component will contain the value of your accumulated retirement fund on 29 February 2024 less "Seed Capital". Seed capital is a portion of your accumulated retirement fund that will be transferred to the Savings Component. The current proposal is 10% to a maximum of R25 000. The Vested Component will also contain all future growth on those accumulated benefits. These benefits will be ring-fenced and all rules under the current regime will continue to apply. Members who resign, or whose service is terminated or who are retrenched will be able to access the full vested amount, subject to tax.
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Author: Anton Schutte: Talent and Recruitment Manager and Certified Financial Planner®: PWG Group