Two-Pot System unmasks defaulting employers

THE two-pot regime, which allows pension fund members to access a third of every contribution made into their retirement investments from last September, is expected to shine a spotlight firmly on companies that breach the requirements of the Pension Funds Act.

- NICOLA MAWSON

The Financial Services Conduct Authority (FSCA) has, as of September 25, identified 5 830 employers that are in breach of the section in the Pension Funds Act that mandates companies have seven days to pay over pension fund deductions to the fund.

As a result, Pension Funds Adjudicator Muvhango Lukhaimane expects complaints to rise simply because pension fund members won't be able to access a third of the investment that should have been paid over.

As of last September, two pots a vested pot and a savings pot - were created so that people could access pension fund investments, ideally in the case of an emergency. To get the savings pot going, R30 000 from each member's fund was moved into the savings pot.

Investors can now once a year withdraw from the savings pot with no cap, although the minimum amount is R2 000. In addition, the money will only be paid over if all taxes due by the member are paid up.

According to the Reserve Bank of South Africa, the reforms have boosted tax revenue. And the South African Revenue Service (Sars) indicated that, as of 2025, a net amount of R43.42 billion had been paid out under the new regime to 2.4 million South Africans.

However, funds also can't be withdrawn if they simply aren't there.

During the 2024/5 financial year, complaints rose 13% to 10,331, partly due to the two-pot system

Writing in the annual report, Finance Minister Enoch Godongwana says the OPFA received 239 two-pot-related complaints and 2 246 enquiries between September last year and this March.