The excitement and anxiety over the implementation of the two-pot retirement system on 1 September 2024 quickly turned to agony for some retirement fund members whose employers had not been paying over contributions to funds. It used to be that most members discovered such non-compliance at point of claim; either for a risk benefit payable in-service, for example, a disability or funeral benefit, or for a withdrawal benefit, death benefit or retirement benefit.
The implementation of the two-pot retirement system resulted in all members having an interest in their retirement fund benefit, in terms of growth to date or contributions being up to date on an ongoing basis.
The data thus far (mostly due to the short period since implementation) points to an increase in complaints lodged with the Pension Funds Adjudicator. For the period 1 October to 31 December 2024, the Adjudicator received 3 105 new complaints, an increase of 34% when compared to the corresponding quarter in 2023.
Even December month where the Adjudicator usually receives 600 odd complaints, resulted in 826 new complaints for December 2024.
The 2 contract staff employed to assist with two-pot retirement enquiries handled 1 260 enquiries in that period. The highest number of enquiries (502) dealt with payment status, highlighting the impatience of claimants with the time it took to process claims. This was followed by 235 enquiries for assistance with the withdrawal procedure, highlighting the need for funds / administrators to communicate processes and procedures for claiming to members, 191 enquires dealt with delay in payment, 96 with the need to update personal details and 88 were querying the value of the available fund credit. Tax enquiries, fund contact details and fund system errors completed the list of notable enquiries.
Employment sector specific umbrella funds, followed by commercial umbrella funds and the Government Employees Pension Fund topped the list of funds with the most enquiries.
For January 2025 thus far, members have started enquiring about when they can access their benefit for a second withdrawal.
All these enquiries underscore the need for retirement funds to increase or maintain communication with members on when and how they can claim in terms of the two-pot retirement system. It also highlights the need for financial advisors to continue educating members on the effect of withdrawals on their retirement provisions.
It is hoped that over time, as more data becomes available, funds, administrators, members and financial advisors are better able to adjust their processes, procedures and interventions to ensure that the best outcomes possible are realised from the two-pot retirement system.