Financial advisor from Inkunzi Wealth Group, Thobile Ndlovu, says its concerning that some companies haven’t been contributing towards the pension funds of their employees.
This comes as many South Africans have been taking advantage of the two-pot retirement system, which kicked off at the beginning of this month.
According to the Pension Fund Adjudicator and the Financial Sector Conduct Authority, some firms have not been contributing towards their employees’ pension funds as far back as 20 years ago.
Speaking to YNews, Ndlovu advised employees to reach out to their fund administrators if they encounter any issues.
On Wednesday, the South African Revenue Service (SARS) reported that claims have risen to about R4 billion in just over a week.
The revenue service says it received 161 607 tax directive applications from retirement fund administrators between 1 September and 10 September.
This means that SARS received an average of 17 964 applications a day.
Ndlovu says South Africans need to do their research before they withdraw their savings.
The Wealth Manager says the large number of people who are withdrawing shows how much people need money.
According to reports, SA’s largest retirement fund administrator, Alexander Forbes, said it had processed 78 000 withdrawals, worth around R1.5 billion from its clients in the space of a week.
The company estimates that at least R270 million will be paid in taxes.
On the other hand, Sanlam Corporate reported that it has processed more than 20 000 claims in just the first two working days of September.
Economist, Dawie Roodt, agrees with Ndlovu that the rate at which people are withdrawing from their pension funds shows desperation.
Speaking to YNews, he said it also reveals the need for South Africans to be educated about the benefits of saving more than spending.
Social media users still have mixed views on the system.
The whole idea behind the two-pot system was to allow SARS more immediate access to funds.
The idea that people will have early access to spending money comes with fine print that’s not exactly hidden. Almost every Rand spent will be taxed 15%.— Captain.Obvious (@ManablazeMick) September 13, 2024
this two pot system is such a scam and i hate that sars is reaping those benefits
— ❤️🔥 (@angie_wxw) September 13, 2024
Lumpsum withdrawals at retirement are subject to this exemption. S11F was implemented to incentivise retirement savings. Not taxing two pot withdrawals would pass a double benefit onto tax payers. The system is designed to deter withdrawing or resigning from your fund. https://t.co/OK1m4BvKuO
— Mr I Will own a Type R 🕯️🕯️🕯️ (@Steph_Gov27) September 13, 2024
People are literally poor and are crippled by debt. That is what the two pot system should show us. https://t.co/owM527Vnq6
— HANGMAN 𐚁 (@_ladytopaz) September 13, 2024
After carefully studying the #TwoPotSystem, I can confidently say that SARS is a sole winner.
This is my opinion, not a financial advice.
— Shareef Maz (@Shareef_ZA) September 12, 2024
Two pot system is exposing companies that are deducting retirement/ pension fund but not paid to any pension fund/ retirement savings or entities. Imagine after retirement you got nothing but have been paying for retirement/ pension fund pic.twitter.com/Uh2GwcXyJd
— Matladi a Ngwato (@matladi123) September 12, 2024
Eish I feel for the employees this digging from the two pot system has brought about such revelations to some.of them.
— MaGwala (@Maphumzah) September 12, 2024
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