National Treasury issued the revised 2023 Draft Revenue Laws Amendment Bill and 2023 Draft Revenue Administration and Pension Laws Amendment Bill in June 2023. The bills incorporate the amendments to implement the first (1st) phase of the roll-out of the “two-component” retirement system. The Parliamentary Standing Committee has approved the bills for implementation on 1 March 2024.



The two-component retirement system offers a straightforward approach for retirement fund members. It involves the creation of two distinct pots, one serving as a savings option to support members burdened by debt, allowing them to access funds without leaving their jobs to settle their financial obligations.

The second pot remains accessible upon retirement, ensuring a secure future for all members. This system is set to be implemented on 1 March 2024. Members will, therefore, be allowed to make one (1) withdrawal annually from their ‘savings pot’ which will be subject to the normal tax.

The retirement system for provident fund members consists of three key components: the savings pot, the retirement pot, and the vested pot.

Here’s a breakdown of each component:

Vested Component

  • Contributions and growth made before 1 March 2024 will be allocated to the vested component.
  • Members may withdraw from the vested component when changing jobs and the withdrawal will be subject to the current withdrawal tax tables.
  • Members will be allowed to transfer 10% of their benefits from the vested component into the savings component up to a maximum of R25 000. The benefit is available to members who resign from their employer as per the pension fund rules.


Savings Component

  • One-third (⅓) of contributions will go into the savings component.
  • The new component will receive an initial “Seed Capital” from the vested component, amounting to 10% of the vested value as of 29 February 2024, up to a maximum of R25 000.
  • This amount will be subject to the member’s marginal tax rate upon withdrawal.
  • Members can make one withdrawal a year to a minimum of R2 000 from the savings component.

Retirement Component

  • Two-thirds (⅔) of contributions will be allocated to the new component from 1 March 2024.
  • Contributions, along with their growth, can only be accessed at retirement, following the rules of the fund.
  • This component may not become accessible when a member resigns.



The Parliamentary Standing Committee on Finance has rejected the proposal from National Treasury to postpone the implementation of the two-component retirement system to 01 March 2025 and approved the implementation of the system as 01 March 2024. The National Assembly would need to approve the Bill in Parliament followed by the National Council of Provinces. Once approved by these two (2) Committees, the Bill will be sent for final signature by the President of South Africa.

There were proposed changes to the Bill circulated however the Standing Committee did not approve these changes. This means the seed capital will remain at 10% of the vested benefit to a limit of R25 000.

The changes clearly set out a system that will enable South Africans to retire better by reducing accessibility to funds. The idea of a more sustainable financial future brings with it a reduced burden on the government infrastructure, increased spending and overall improved lifestyle and financial outcomes.

ASI welcomes these legislative changes as they improve retirement outcomes, allowing members to exit the fund at retirement age. ASI awaits patiently for the National Assembly to approve these Bills in Parliament as the next step in finalising the implementation of the bills.

For any further information or assistance, you can book a free online consultation with your trusted ASI Financial Advisor at a date and time convenient for you.