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1 September 2024 Confirmed implementation date of the Two-pot system


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1 September 2024 Confirmed implementation date of the Two-pot system

Webber Wentzel

27th February 2024


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The Draft Revenue Laws Second Amendment Bill (Second Amendment Bill) confirms 1 September 2024 as the implementation of the Two-pot system. This is among other significant changes to the Revenue Laws Amendment Bill (the RLAB) which are set to become effective on the same date.

On 21 February 2024, the National Treasury released the Second Amendment Bill to make technical corrections to the RLAB. The Second Amendment Bill follows the proposal by Minister of Finance Enoch Godongwana, that Parliament extend the date of implementation for the two-pot system contained in the RLAB from 1 March 2024 to 1 September 2024 for various reasons supported by industry stakeholders. Read Webber Wentzel's insight unpacking the concerns raised by Minister Godongwana.


Unpacking proposed changes in the Second Amendment Bill

Some of the proposed changes in the Second Amendment Bill signify positive adjustments to the existing system. Firstly, the bill acknowledges and incorporates the new implementation date of 1 September 2024, providing clarity and alignment with the extended timeline advocated by stakeholders. Additionally, the bill eliminates the necessity for a tax directive when transferring the seeding amount from the vested to the savings components contemplated in the two-pot system.


The proposed amendments to the definitions of the three components exclude maintenance awards. This adjustment ensures consistency with existing tax provisions regarding the tax treatment of maintenance awards under section 7(11) of the Income Tax Act 58 of 1962.

Furthermore, the bill addresses intra-fund transfers and associated tax directives by proposing that the reallocations of amounts between the three components are not treated as transfers for which tax directives are required. Consequently, the requirement to obtain a directive for reallocations between the three components has been withdrawn in the Second Amendment Bill.

While these proposed changes are a step in the right direction to give effect to the two-pot system, the lead time provided still falls short of that which industry stakeholders advocate for to overcome the practical challenges associated with the new system, including how it will be implemented for defined benefit funds (DB funds). A major difference between defined contribution funds (DC funds) and DB funds is that in DC funds, it is possible to calculate the value of the contributions that the member has already made, but in DB funds, the final pension fund benefit will be based on the final salary of the member plus the number of years’ service.

The RLAB has provided for the one-third and two-thirds allocations to the savings and retirement components of DB funds to be determined regarding a member's pensionable service on or after 1 September 2024, or a reasonable method of allocation as approved by the Financial Sector Conduct Authority (FSCA). The implementation of the two-pot system for DB funds must be carefully undertaken to ensure fairness to all members of each DB fund. Any necessary engagements with the FSCA by DB fund administrators will also require additional lead time from the promulgation date to the implementation date which the Second Amendment Bill does not provide.

In a media statement published by the National Treasury, the Second Amendment Bill is aimed at clarifying the language in the RLAB and simplifying the directives system for both administrators and the South African Revenue Service (SARS), allowing for an efficient implementation of the two-pot system. The deadline for public comment on the Second Amendment Bill is 31 March 2024. Webber Wentzel’s experienced tax and pension teams are available to provide legal advice to clients looking to submit comments on the Second Amendment Bill.

Submitted by Joon Chong, Partner & Nicolette van Vuuren, Senior Associate from Webber Wentzel



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