Old Mutual opens the two-pot floodgates

Old Mutual has announced that its clients are now able to submit their two-pot withdrawal applications after the date for Phase 2 of its withdrawal process was brought forward. 

The company had initially only enabled clients to view their savings, retirement, and vested pot balances via the Old Mutual Channel on WhatsApp. Importantly, it also gave them the time and opportunity to get their tax affairs in order before submitting a withdrawal application.

Phase 2 enables clients to submit withdrawal applications via the WhatsApp channel. 

Michelle Acton, Retirement Reform Executive at Old Mutual, said the phased approach was adopted to help ensure the system could handle the expected 600,000 withdrawal applications. 

 “It’s critical for all our retirement fund members to check that we have their up-to-date personal details, as any mismatch between the details provided and the details on record with Old Mutual will result in a withdrawal request being declined or delayed,” Acton said. 

“These measures are in place as a security precaution to prevent fraud and protect customers.”

Acton urged individuals to be patient, saying there is no deadline for withdrawals and that the funds in their savings pots should only be used for emergency expenses. 

“There is no deadline. Members can apply for a single withdrawal from their Savings Pot at any time during every tax year, but the more money you leave in your pot, and the longer you leave it, the more it will grow.”

To ensure smooth processing, retirement fund members must have all necessary documents ready, including a valid ID number, bank details, annual income and tax number.

Members who submit a valid withdrawal application can expect processing times of up to 30 days, depending on volumes and turnaround times from SARS. 

Acton also outlined some key facts that all members should know prior to withdrawing any amount from their savings pot. 

• R2,000 minimum balance required. Withdrawals from your Savings Pot are only possible if you have at least R2,000 in your savings pot.

•  Only one annual withdrawal allowed. You can make one withdrawal from your Savings Pot per tax year, between 1 March and 28/29 February. This restriction is designed to help preserve your retirement savings for the long term.

• Legacy funds are excluded unless you request inclusion. It is important to check whether the Two-Pot Retirement System applies to your retirement fund. Some older retirement funds, known as legacy funds, are not automatically included in the new system.

From 1 September 2024, all future contributions to your retirement fund will be divided into a savings pot (one-third) and a retirement pot (two-thirds). 

Although the retirement pot cannot be accessed at all until you retire or pass away, the savings pot can be accessed once every year to help deal with financial emergencies.

At retirement, the retirement pot will enable you to secure a regular annuity or income, while the savings pot will provide you with a lump sum. 

This means the more money you leave in your savings pot to grow and grow, the better your financial situation at retirement will be.

All existing retirement savings accumulated before 1 September 2024 will remain in a separate vested pot governed by the old retirement rules.