Saving for your pension in SA

TWO-POTS: FOUR TIPS TO NAVIGATE THE NEW RULES

- Adrian Saville

• Under new system, temptation to withdraw funds is high, but it forces people to save.

South Africa is changing its pension laws. The new system is designed to give individuals the opportunity to access only a portion of their retirement funds before they retire in the case of dire need - or even in case of desire. To an extent, this makes sense, given the low savings rate in the country.

It forces individuals to save at least some of what they have in their pension fund instead of being able to spend it all when they change jobs, but it also allows them to spend some of what they couldn't save by other means or on their own.

It puts retirement savings into two "pots": one to keep for retirement and one to spend sooner if needed.

It strengthens the country's retirement system and grows longterm savings.

But the changes also present a number of challenges.