Retirement: Two-pot cheat sheet

Given the overwhelming amount of information available about the new two-pot retirement system, below we provide a “cheat sheet”, which includes 10 “did you knows” and an infographic, which we hope will be a useful overview for members, employers and advisers.

Did you know?
1. Two pots – but one investment
From 1 September 2024, all new contributions to retirement funds will be split into two components, as shown in the infographic below: One-third will be allocated to a savings component, which members can access once a year before retirement, and the remaining two-thirds will be allocated to a retirement component, which will be inaccessible before a member retires, and at retirement must be used to purchase a retirement income product. Existing retirement savings will go into a vested component, which will be treated in the same way as it was before 1 September 2024, except that no further contributions can be allocated to it.

While the two-pot system will offer a measure of flexibility by providing some access to savings in case of severe financial stress, it should not change how you think about or invest your retirement savings. You should view the components in your retirement account holistically and remain invested in funds that will offer you the best chance of having sufficient savings to provide an adequate post-retirement income.

August 15 2024 By Daniella Bergman - Allan Gray