Two-pot retirement system could impact divorce orders, cautions pension funds industry
On Tuesday, pension industry stakeholders warned the standing committee on finance that several inconsistencies with the Divorce Act have to be ironed out first.
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CAPE TOWN - The pension funds industry is warning that the proposed new two-pot pension system could impact divorce orders in future.
The new system is set to allow for the early withdrawal of funds from retirement savings as from 1 September.
But on Tuesday, pension industry stakeholders warned the standing committee on finance that several inconsistencies with the Divorce Act have to be ironed out first.
It’s a race against the clock to implement the new pension fund system that is set to give relief to many cash-strapped consumers.
The Pension Funds Amendment Bill was tabled by the finance minister along with the budget in February.
But Rosemary Lightbody of the Association of Savings and Investment in South Africa said the bill clashes with divorce orders that give ex-spouses access to a former partner’s pension.
“How it is to be resolved, we need to really put our heads together and work that out. Hopefully, a line in the Pensions Fund Act that overrides the Divorce Act will work.”
Meanwhile, the Institute of Retirement Fund’s Nancy Andrews fears there won’t be enough time to adjust administrative systems to give effect to the bill before September.
Despite the concerns, both bodies said they support the proposed two-pot retirement regime.