Two-pot system: SARB sees households' disposable income getting R80bn cash boost in Q4
The two-pot retirement system is set to be rolled out from the beginning of September after President Cyril Ramaphosa signed key legislature into law.
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JOHANNESBURG - The South African Reserve Bank (SARB) says it expects household disposable income to get an R80 billion cash injection in the fourth quarter of the year, as cash strapped consumers withdraw from their pension funds.
The two-pot retirement system is set to be rolled out from the beginning of September after President Cyril Ramaphosa signed key legislature into law.
It gives members of retirement funds access to savings without having to resign or cash out their full pension funds.
The SARB says two scenarios are likely to play out when the pension reforms come into effect.
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The first, is the high withdrawal scenario where most pension holders withdraw large portions of their available funds.
This would see an extraction of an additional R100 billion from the savings portion of the pension funds.
The second - more moderate and more plausible scenario - is where fund members avoid tax penalties and only make emergency withdrawal.
The central bank estimates the withdrawal under this scenario to drop to R20 billion in 2025 before slightly increasing again in 2026.
It says the economic and fiscal repercussions are likely to be linked to how people will react to this new source of income.