Since Old Mutual has opened their claims submission process for the two-pot retirement system, the financial services group has received claims to the value of R2.3 billion and about 180,000 claims.
This is according to Michelle Acton, Retirement Reform Executive, Old Mutual.
In terms of the claims process, Acton said that they haven’t been any issues and the South Africa Revenue Service (Sars) has been quick to respond to tax directives.
“We have had no problem with our claims process and we are very happy with how it's running,” Acton said.
“Our biggest focus has been about managing the volumes and moving the claims through the process. Sars has been quick in responding with tax directives, so we have had no issues on that front.”
While Old Mutual does not have the data on what South Africans are spending their two-pot money, the 2024 Old Mutual Savings and Investment Monitor (OMSIM) has shed some light on what members are expected to use the money for.
According to OMSIM, members are planning on using their two-pot retirement system money to settle their debt, take care of emergencies and to pay medical bills.
OMSIM showed that:
– 60% of members indicated that they will paying off debt as their primary use
– 23% of members will be using the money for emergencies
– 4% of members will be paying their medical bills
“This reflects a clear focus on financial stability and essential needs when accessing their savings,” Acton said.
Acton said that fund members who are contemplating making a withdrawal from the two-pot retirement system should remember that there is no rush.
“The system is here to stay, so take your time to evaluate whether withdrawing is the right decision for your financial situation,” Acton said.
Old Mutual is encouraging members to carefully consider their financial situation before withdrawing emergency savings from the two-pot retirement system.
“We recommend consulting with a financial advisor before making a withdrawal because they can help you understand the tax implications and assess the impact on your long-term financial goals.”
Are you eligible for the two-pot retirement system?
According to Acton, to be eligible to withdraw under the new two-pot retirement system, a person must have available funds in their savings pot which can be from a retirement fund if they are a member or from a retirement annuity or preservation fund.
The minimum withdrawal amount is R2,000, however, should the person's savings pot amount be less than that they will not be able to withdraw from the savings pot.
“Remember, any withdrawal will also be taxed at the individual’s applicable marginal tax rate, and an administration fee will be charged,” Acton said.
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