S3 E8: Two Pots For Retirement

In Season 3 episode 8 Arthi & Malika are joined by special guest Tiaan Herselman, to discuss the new two pot retirement legislation that came into effect on 1 September 2024 in South Africa. It was designed to assist in the current retirement crisis that retirees are experiencing, where they do not have enough financial resources to allow them to retire comfortably. 

Listen in to hear Malika, Arthi  & Tiaan discuss:

• What exactly is this new legislation and what do the different “pots” mean
• The  intention of this retirement legislation
• The new rules & implications for your savings & tax
• Practical examples of various scenarios depicting the the new pots
• Debunking any myths and mistruths about the 2 pot system

and so much more!

We would love to hear your views based on the concepts covered in this episode. 

Do rate, write a review, and share with others.

About Tiaan Herselman:
Tiaan is the Head of Proposition Old Mutual Wealth. He holds a B.Com Financial Planning (cum laude), Post Graduate Diploma in Financial Planning &an Advanced Post Graduate Diploma in Estate Planning. He is also a certified financial planner ® & has spent the last 14 years in the financial services industry during which he started out his career as a financial planner and then moved into the financial planning fintech and investment landscape. He is currently busy completing his MBA at the University of Johannesburg. He has a strong passion for financial planning and making people aware of the value of good financial advice.

This episode is proudly sponsored by Old Mutual Wealth.

Chapters

• 0:01 Advertisement: Old Mutual Wealth
• 1:44 Introduction
• 2:21 About Arthi Rabikrisson & Malika Peterson
• 3:25 Welcome Listeners!
• 4:15 Welcome Tiaan
• 4:50 The Intention Of The Two Pot Legislation
• 7:48 What Exactly Is The Two Pot System
• 8:31 The Vested Pot
• 8:50 The Savings & Retirement Pot
• 11:08 Summarizing The Pots
• 11:40 A Practical Example
• 15:00 Implications Of Withdrawing From Your Savings Pot
• 19:00 What Are The Myths
• 22:33 What About Retrenchment Or Divorce
• 24:26 Smart Choices For Your Retirement
• 27:02 Arthi's Parting Shot
• 28:08 Tiaan's Parting Shot
• 29:55 Malika's Parting Shot
• 30:46 Thank you Listeners!
• 32:00 Swanning Out For Now

Transcript

Arthi Rabikrisson: 0:00

Your legacy is about more than just investment returns. It's about the peace of mind that comes with knowing your investments are in the right hands and that you've partnered with an investment manager who has the right skills and experience to grow your wealth. Old mutual wealth is an world class investment destination, offering you a wide range of investment strategies and specialist wealth management solutions. Whether your goal is to grow your wealth, generate income or preserve capital Old mutual wealth selects the best and most suitable investments based on your investment strategy and their extensive research and insights. Tgether with your financial planner, old mutual wealth team of experienced specialists go to great lengths to understand what really drives you. Once they know your priorities, they model a strategy around your specific needs supported by a multi skilled team dedicated to taking your wealth further. Whether your goal is to grow your wealth, generate income or preserve and pass on capital, old mutual wealth is here to partner with you on this journey so that you can do more, have more, leave more and be more. Old mutual wealth is an advice led wealth management business aimed at providing financial planners and their clients with a full suite of industry leading strategies and services. For more information, please visit their website on www.oldmutual.co.za/wealth Hi there. I'm Arthi Rabikrisson,

Malika Petersen: 1:52

hello. I'm Malika Peterson.

Arthi Rabikrisson: 1:54

Welcome to

Malika Petersen: 1:56

The swan effect podcast.

Arthi Rabikrisson: 1:58

Money makes the world go round. Yet it's not so easy to understand its complexities, particularly when it comes to investing.

Malika Petersen: 2:07

That's why Arthi and I are using this platform to educate, inspire and help you gain confidence in your relationship with money

Arthi Rabikrisson: 2:16

so that you can better manage your finances and investments.

Malika Petersen: 2:20

We are two women in finance.

Arthi Rabikrisson: 2:22

That's pretty cool, isn't it?

Malika Petersen: 2:25

It certainly is. You've been in stockbroking, private wealth management, asset management, and now an award winning businesswoman who is coaching and assisting businesses with capital and strategic advice.

Arthi Rabikrisson: 2:38

And Malika, you have a wealth of experience in wealth, excuse the pun, in financial planning, investments and relationship management. So you're also at the coalfacewhen it comes to where and how people are investing, both getting it right and getting it wrong,

Malika Petersen: 2:56

and stuck in the grey areas too. Indeed, I've seen the many phases and moods of financial cycle and how our decisions at those times impact us. So listeners and subscribers, if you are looking to get unstuck, feel empowered and make some strides in how you tackle your money, we are here to help you,

Arthi Rabikrisson: 3:18

and it all starts with listening to this upcoming episode. Enjoy. Hi. Listeners, it's spring in South Africa, and our beautiful flowers are blooming. Our birds are singing. It's just a great time of year. Hi, Malika, how are you?

Malika Petersen: 3:35

Hi, Arthi. Hi. Listeners, I am well, I must admit that I'm very happy that thing is here, because the cold weather is just not for me. In South Africa, the birds are not the only noise that we've been hearing, though, right? Experiencing a lot of noise around the new two part legislation, which became a reality just a couple of days ago.

Arthi Rabikrisson: 4:00

Oh my goodness, this is so true. Malika, there's been an overload of information on social media, in traditional media discussions around the braai. It's a hot topic. Let's put it that way and because of that, we have invited somebody who's been talking about this for a while now and is so knowledgeable about it, he's the head of proposition from old mutual wealth. Tiaan Herselman, so Tiaan, Hi, welcome to the swan effect podcast.

Malika Petersen: 4:26

Yay.

Tiann Herselman: 4:27

Hi Arthi & Malika, thank you for having me. I've really been wanting I've always had FOMO. I've been wanting to just come say hello and pop in. And I'm so grateful that you invited me. I'm looking forward to a wonderful conversation with two amazing rock stars.

Malika Petersen: 4:41

Oh, thanks Tiaan and welcome to spawn effect podcast. We are very, very happy to have you here. I think we have a lot to cover today, so we're going to get right into it. If that's okay with you. There's been quite a lot of discussion around this topic, but what is the structural intention of this legislation? Is there a problem statement that the South African government is trying to solve with this legislation?

Tiann Herselman: 5:05

I'm glad you asked that, and it's actually a very, very good question, and probably a good starting point. So I think most people around the country have been focusing on the withdrawals and the more technical aspects around that, but I think the actual purpose around the legislation is very important to just keep in mind. So other words, why did treasury actually end up doing this? And the latest data from the oldmutual savings and investment monitor keeps on telling us that only 6% of South Africans will actually reach retirement age and be able to retire and maintain their current lifestyle. We also saw that 4 out of 10 people currently are actually part of this sandwich generation. In other words, they're looking after both their kids and their parents. So all of this is obviously quite concerning, because it means that they'll be forced to rely on family members, their communities or small government pension that it's available in retirement. Now, if you can say that we actually have close to 90 million South Africans that are formally employed and many more that are actually informally employed, there should be way more people that can actually afford to retire. You look at Australia, they actually mandate you to put 10% away. In our country, you don't have to. There's also a lot of people when they reside from their job, they often access their funds. Another study showed last year that 6 out of 10 people actually when they move employers, cash in their pension funds. And this obviously occurs tax so you actually try and deter people from doing that. But there are still too many instances where this is actually happening. I'm actually in our country. There are even instances where people deliberately resign. Now, again, this isn't a country where almost a third of people are unemployed, but they deliberately resign to be able to access their pension funds. Now this has a devastating effect on retirement planning, financial planning, and just the overall well being of the person's finances. So the two part legislation is designed to reduce these instances to deter people from taking out their money before retirement, while also aiming to still preserve or provide some access to the money before retirement, and it basically encourages those who are not saving enough towards retirement, to do so without the fear that I won't have any access to my money whatsoever before retirement in the event that there is an unfortunate emergency.

Arthi Rabikrisson: 7:10

I mean Tiaan I love the stats that you're giving us, because it puts it into stark reality of what's going on. And I'm ashamed to say, unfortunately, when I was younger in my career, I put my hand up. I also did withdraw my pension fund when I moved from my first job to my second. But I've learned. I've learned from that. But I guess you know, essentially what you're saying now is this legislation that's come about. It's designed to actually address this retirement crisis, for want of a better word, in the long term, but then also to ensure that someone like me young in my career, potentially having some sort of a financial emergency. In the short term, I can still draw something out of that. So listeners, you know, to get a better grasp of this and how this is going to be achieved. I think this is a good way for Tiaan, for you to come and maybe help us understand, describe exactly what do we mean by this two pot system, because this is another thing people seem to be getting confused about

Tiann Herselman: 8:00

The first very important date for the two pot system, and it's actually three pots. But the very important date is the first of September 2024 now, whatever retirement fund you have currently, whether it's a retirement annuity, a pension fund, a Provident Fund, a preservation fund, or even if you're part of the GPF, if you're a government employee, all the current rights and benefits and rules that you have for your retirement fund, everything up until the first September, it all stays the same. So the first pot in this three pot system, actually not two pots, is what they call a vested pot. And just think of that as old money, old rules. So whatever you have on your retirement funds up until the first of September, or actually the 31st of August, 2024 all the old rules stay in place. And actually call that it vested which just means that it stays in place. Nothing happens. Then going forward from 1 September, all contributions to retirement savings will be split into two parts. So that's actually where the word two pots come from, and the first one is a saving pot. Think of that as the one that this is where you can access some money, and the second one is a retirement. But think of that long term savings. I can only get access to that at retirement. Now, the great thing is, in the savings pot, you might say, well, how much can I access? Well, of the old money. Remember old rules. Everything stays in place as at the first September. What the charley we have said is that you know what going forward from one September these two new pots, saving pot and retirement pot, 1/3 of all of your contributions goes into the saving pot and two thirds goes into the retirement pot. So if you are contributing R3000 a month, it means R1000 goes into the saving pot and R2000 goes into the retirement pot. And as long as you have more than 2000 Rand in your saving pot, you can take out that money once a year. It's once per tax year, from 1 March till 28th of February. A Treasury letter business said, Well, if you're starting in September and you're only contributing R1000, and that's the first bit of money you've got in your saving pot. Firstly, it's below the 2000 minimum, and also, it's not a lot of money. Even if you only have 2000 to help them, maybe for short term emergencies or people that are struggling with debt. So on one September, they said, Okay, this old money where the old rules are still applicable, the vested pot, we will allow you to move some money once off from the old money the vested pot into the new savings pot. Another question is, well, how much? In simple terms, whatever you have, they will take 10% of that and move it into the saving pot as your first bit of savings. But that 10% has a maximum and it has a minimum. The maximum is 30,000 and the minimum is 2000 so as an example, if you have in your pension fund R500,000 10% of that would be 50 but only 30,000 will move across to your saving pot. Now, very important, the vested portion will remain invested at the same growth rate depending on where it's invested. The same is true for your saving pot and the same is true for your retirement pot. But so just nothing changes in terms of the way it's being invested, unless you make a change in where you're investing, it still grows at the same rate, just in the background. Now, behind the detail, there will be these three pots. Now, again, to summarize, vested pot, old rules, nothing changes, saving pot you can access once a year, as long as the amount is more than R2000. Retirement pot you can now only access at retirement, so either the retirement age of the fund or age 55 so I've gone through that a very quick way. But I hope that gives you an idea as to what the two part system in its simplest format is.

Malika Petersen: 11:28

Ja, so I think that is so clear and contrast. And I think, you know, Arthi and I always pride ourselves in having a podcast that makes things practical for our listeners. So I think let's dive, let's just dive into some of the practical examples, if I'm understanding what you're saying correctly, I want to assume for the second that I contribute R3000 a month towards my pension fund. So let's say my value at 31st of August is 450,000 as an example, Can you just help me to fully understand what will be in each pot, and then what would be the scenario going forward, from first September onwards.

Tiann Herselman: 12:07

100% it's always, it's always good. When we actually have actual examples, or even a whiteboard, we can start writing on a koki So you make, you know, I'm writing on a whiteboard and the first pot we look at in three parts is the vested pot. So in your example, Malika that you gave me, first, we need to ask, okay, well, how much is going into the vested pot, the old pot? So if you got R450,000 , based on your example, in your pension fund, remember, the first pot that we create is old money. So 450000 would go into that pot. However, treasury have said that 450000, we want to take a bit of that money and put it to you in the saving pot. So in your case, 10% of 450000 would be 45,000 however, that is limited to 30,000 so your first pot is going to be your 450 minus 30,000 so 420,000 goes into your old pot. All the old will stay the same. But now 30,000 we moved over into your saving pot. And then going forward, every contribution from now on in September. And in your case, you said you are contributing R3000 a month. Remember, 1/3 now goes into the saving pot. So you already have in your saving pot. You already got your 30,000 now for the month of September, we're going to say there's 30,000 your a bit of your old money that referred to that a seeding capital, we added that your R000 for the month of September, and in your retirement pot, two thirds of your contribution will go into there now, R30,000 . Two thirds of that is 2000 so for you, in September, you will have, in your old pot, your vested pot, you'll have 420,000 plus any growth you might have in that particular month. In your saving pot, you'll have your 30,000 plus your R1000 contribution for that month. And then in your retirement pot, you will have your R2000 at the end of that month. Now, if we looked at one year later, so 12 months from now, the total you would have would still be in your vested pot, your 420000. Remember the 450 minus the 30 that we took out to move to the saving pot, plus any growth on that. In your saving pot, you'd have your 30,000 that you initially got plus your 12 months of contribution. So that's 30,000 plus 12,000 because you're contributing 1000 rounds going into your saving pot. So 12 months from now, you'd have 42,000 in the saving pot, and then 12 months later in your retirement pot, which you can only access at retirement, you'd have 12 months of contribution. So 12 times 2000 would be R24,000 in your retirement pot. Now again, all of that, you have to add some growth. So obviously, markets go up and down. They go up more than they go down. So you'd have these three pots before 20,000 in your vested pot, you would have in your saving spot, we'd have your 42,000 in your saving pot plus growth, and then you'd have R24,000 in your retirement pot after 12 months, plus growth.

Arthi Rabikrisson: 14:49

Tiaan, I think that was so cool. I mean, in my mind, I'm actually visualizing these three pots and with the numbers that you're sharing. It's making so much sense. Really, really. Thank you for that. Okay, so. So let's assume I have a financial emergency that's come up. Now, I know, for different people, financial emergencies could look like a new handbag, you know, because I'm going through something emotional, or I need to go on holiday, but let's assume it's something like a really big medical emergency where maybe I don't have enough additional resources through my medical aid, perhaps to pay for it, but I need to access now my savings part. What is the implications of me doing this from there?

Tiann Herselman: 15:25

That is a fantastic question. I think that the starting point is that the savings pot forms part of your retirement funds, and it's imperative that you think very carefully before actually withdrawing from it, because will impact your overall retirement planning and could mean that you potentially won't be able to meet your retirement needs when you get to retirement. So when you ideally don't want to be drawing money for handbags or holidays, as these and other world are not financial emergencies. But let's assume you have a financial emergency, like you may need to fund an unexpected medical bill, as an example, you are able to access anything above R2000 in the saving pot. So as long as you have more than R2000 in your saving pot, you can take that out once every tax year. Now again, remember, the tax year runs from one March 28 of Feb. So the first tax year for the two pot system will be one September till 28th of Feb. So as we discussed, if I take the earlier example, let's assume that after one year, 12 months from now, you haven't touched your saving pot, and you will have R42,000 in that pot. If we ignore growth now, it might go up, and in most cases, it will probably go up. So you could take out the R42,000 that in your saving pot, plus whatever growth that is now just the one thing to keep in mind is you are now to take it out, because it's more than 2000 but whenever you take money out of the savings pot, you are going to be taxed on it. Why? Because previously, all the money that you contribute to your retirement funds, in most cases, you actually got a tax deduction for this. So if you were earning 20,000 and you were contributing 2000 SARS said, I'm only going to tax you on 18,000 so now, because you are taking this money out of the savings pot, that'll actually be added to your taxable income for the year. So if you were earning 200,000 for the year or 500,000 SARS I say, Well, before we can hand over the money to you, we need to first calculate what the tax will be on this money. And it's taxes, income tax. They say, Well, you're earning R500,000 . Let's add the 42,000 on top of the 542,000 so let's say, if you were a 25% tax payer on the 25% rate, they would say, well, on your 42,000 we actually have to take off 10,500 earning tax that will be paid to SARS on your behalf, and you'll only receive on your 42,000 you'll only receive 31 and a half 1000 in your bank account. Now it's very important that people consider a tax implication. And as I mentioned, the minimum that can be withdrawn is R2000 , and the withdrawal is only allowed once every tax year. So at this stage, you should be mitigating the impact of this withdrawal, or thinking about what the impact will be on your retirement plan, and a financial advisor will be able to assist you to calculate how much you have to contribute towards a retirement annuity to make up for the gap in your retirement savings if you actually make use of that withdrawal once a year. And also, a great thing about like I mentioned earlier, all retirement contributions is that they are tax deductible, as SARS wants to encourage you to contribute to retirement savings, and this may result actually in you getting some all of that tax back that you paid on the withdrawal from the saving pot for that particular year. But it's really important that, whenever you make these decisions, speak to your financial planner or financial advisor to get their input on the entire process and see the impact on your overall financial plan.

Malika Petersen: 18:38

I must admit Tiaan, like after listening to you and kind of hearing what you have to say, it's all sounding quite positive for our retirement savings in future. I mean, for me, that the fact that you are able to contribute and get, you know, kind of contribute more towards retirement communities, get that tax relief, etc. I'm quite excited about the what our future looks like, but there's still a lot of trepidation around the two pots of them. I mean, there's been so many funny videos on Tiktok and social media. I've seen this one lady say that on the 1st September she's going to have, she's going to make two pots of food and not one, which is, I thought was very funny. But, I mean, are there any like, myths or misconception that you want to bust or or debunk based on what you've heard from or just in in terms of the experiences you've had and questions you've had come before?

Tiann Herselman: 19:26

Ya, so it's Malika. This is such a such a good question and such a good point that I actually wanted to touch on. I actually got stopped at the airport the other day. I traveled quite a bit, and three policemen stopped me and said to me, Hey, we will see you doing videos on two pot. Now, I'll be honest, the first moment when they stopped me, I thought, Oh, no did someone put something in my bag. No, it's never good when police stopped you at the airport, like she stopped me and said, Hey, we see your two pot videos on Tiktok. Two of us are actually thinking of resigning because, you know, obviously the government's coming to take our money and they trying to get their hands on our pension funds. And I think that the biggest misconception out there is that the old rules, the old rights that you had, um, fall away in the two pot system. It's very important to understand that your old money, your vested part, whatever you have in your retirement fund, whether it be again, pension, profit and retirement annuity, GPF, preservation fund, whatever you have on the date till the first September or 31st of August, plus growth. None of those rules change. So in other words, if you were to resign, we hope people don't, but if you were to resign or get retrenched, after the two pot system kicks in, you still have the option of taking out all of that money. You'll pay tax on it the first 27 half 1000 of tax free, and then you tax from 18 to 36% but you still have all the rights for the old money. So that's the first biggest misconception and myth. I think that's out there, especially for government employees. A lot of them are resigning, and I don't understand why you would do that, because you don't lose any of the rights. In actual fact, you were getting a bit more flexibility, because now not only do you have all the old rights you had for the old money up until first September plus growth, you now also get to access some of the money, which you couldn't previously Do you had to get retrenched or resigned to get access to that money. The second misconception I'm gonna just briefly touched on is the implications upon death. Now, a lot of people think that something has changed. Now, very important, two pot is only applicable to contributions while you're still alive, and how you can access your money and the long and the shortest. It allows you to preserve more for retirement while still getting bit of a bite to the cherry. Before retirement, you can access some of the contributions, or 1/3 of it after one September, plus your senior capital. But upon death, nothing changes. There's still beneficiary nominations, and your beneficiaries, if you were to pass away before you reach for retirement, still have the option of either taking the money in cash or putting it into a retirement fund that provides them some form of income or combination of both. So none of those rules upon death options to your beneficiaries, none of that changes whatsoever. So those are two big misconceptions with the two pot system that I think people are getting confused about a lot. And the last one we've mentioned it now a couple of times is how much can I draw? The simple rule is very simple, whatever's in your saving pot, as long as it's more than 2000 you can take it out. People get confused about the seeding capital and how much will move into the saving pot. We spoke about that briefly, but very simply, as long as you have more than R2000 in your saving pot, you can take it out once per tax year.

Arthi Rabikrisson: 22:20

No, I think you've made it so clear. Tiaan, so clear, and especially on the piece about, you know, when, when somebody passes on, because everyone's then concerned about, you know, the beneficiaries and all of that. So, I mean, I think you're putting us at ease on that. And can I also just check, I mean, does do the rules still apply if you've been retrenched, and in the event of a disability as well, where you can still

Tiann Herselman: 22:40

So upon, let's say, let's look at retrenchment. access it. So maybe just for for retrenchment, um, very important to understand is that the old rules that you have are 100% still, in fact. So if you get retrenched, or if you resign, you can still access 100% of that capital for the vested pot. Okay, so nothing changes there. So nothing changes for any of the old rules. And that is something you can keep in mind, that you're not losing any flexibility that you didn't have on your old money. Okay, that's a really important part we want to push through to the members. Yeah. And also, upon death, nothing changes, and it's not even going to divorce. I feel like a lot of South Africans are planning on getting divorced. Maybe two seconds is quickly on that. Because the question I get a lot as well for divorce now, because there's two pots. One thing to keep in mind is that, obviously, with the saving pot, you can access some of that capital once a year, but if your retirement administrator gets notified. So if I'm invested with old mutual they look after my pension fund and I'm going through divorce, the moment they get notified that divorce proceedings have been entered into, I cannot access my saving pot anymore. And also, if I do get divorced, they refer to that as the non member spousal or the person that gets awarded a portion of my pension as part of the divorce settlement. They have only two options. They can either take all of my or the portion that is awarded to them, let's say 50% so in Malika, in your early example, if I have 450,000 half of those 220 5000 they can choose to take the 220 5000 out in cash. Again, there will be quite a bit of tax to pay. Or they can say, You know what, I want to take my portion of the 220 5000 those three potsand transfer it over to my own retirement fund.

Arthi Rabikrisson: 24:14

Okay. No. I mean, thank you, Tiaan, again, making it so clear. And these are all things people are grappling with at the moment, right? These are all life things that happen to us, so it's good to know how this is going to fit in with all of that. Alright? So Tiaan, maybe another one for you. So, you know, we're in September nw, the two pot is implemented. We've got the new non vested pot starting to accumulate the savings pot as well. How can I, as an individual, start to make some smart choices for my retirement.

Tiann Herselman: 24:45

I think there's, there's two things. The first one is, always speak to your financial advisor. Remember, it's part of their role to stay up to date with what's happening. Because this is actually all new legislation. That's one of the biggest changes we've seen in our retirement industry in quite some while. And even though we are talking about what we understand at the moment, there are still amendments being made as we sit here today, because a lot of the retention Funds Act, a lot of the rules need to be updated, and there's various acts that need to be updated by the FCA and by Treasury, etc. So all of what we are talking about now is still completely new. So even in a month from now, there might still be one or two changes that might be implemented. So my first recommendation would be, speak to your financial advisor they will look at it, they will stay up to date. And also, secondly, maybe your own research. Go read up about it. But this is the one topic whereby, because there are still amendments being made, things tend to change. I think we have a good idea as to what it will look like in the end, but there are still amendments being made as we speak. So two things, spend some time, listen to podcasts like this, and secondly, consult your financial advisors. Anything you're not true about, because they will be informed first and foremost, as these changes, as these amendments are rolled out and updates are made to all her retirement funds.

Malika Petersen: 25:53

Ja, I think that's it. I just want to reiterate that point, because I think people don't often understand this is brand, brand, new legislation, like you said, there's so many role players in this associated and I think we need to reiterate the importance of consulting an financial advisor. I think Arthi and I through the podcast, have very often tried to highlight the importance of consulting your financial advisor, but specifically around Two Pot, it is very, very important, because there are two big things that your decision around making any withdrawals could impact, and that's number one, with retirement planning, always say, Do your kids a favor and don't become a burden to them in your old age. You know that's the one thing. But the second thing is also your day to day tax position. Because I think often people forget that. They think about, oh, my retirement is so far in the future, I don't have to worry about it. The reality is that a withdrawal from your savings pot will directly impact your tax position today. It could potentially put you in a new tax bracket. There's, there's so many things that could happen. I think it's really important that people need to understand that. Alright, and with that, it's time. I can't believe today. Today feels like it's it's gone so quickly. We've been having a lot of fun talking about two pot, but I think what is your parting shot?

Arthi Rabikrisson: 27:05

Thanks, Malika. I think it's just exactly what you just said just now that we often think retirement is a far off milestone. We're going to get to it. We're going to save for it at some point. But I think what's clear is that most of us have not been successful in actually getting that done, so that is why this legislation is in place. Everyone you can choose to see it negatively, or you would ask that opportunity, which it is, to engage in meaningful decisions about how you eventually do want to retire, you know, and I have this, I want to be comfortable. I want to have a wonderful nest egg. I certainly do not want retirement and to be a stressful situation. So everyone think about it in that perspective, where you move away from not having this luxury of choices about whether I should or shouldn't be working post retirement to a case of, well, maybe I still have to keep Working beyond retirement because I haven't actually saved for it. So for me, I want rest, relaxation, travel in my twilight years, and I want this savings pot, and of course, what I'm putting into my investment pot as well to make that work for me. So that will be for me. Tiaan, what would be your parting shot today for the show?

Tiann Herselman: 28:11

Firstly, thank you for having me. I feel like I am now also rock star. I can say that I've been on the podcast finally, um, ja, for me, just one, one or two things. This is completely new. It's new legislation Malika, you hit the nail on the head. There's a lot of role players involved with it's changing the fund rules, whether it's the administrators, whether it's SARS so keep that in mind, this is completely new. And behind the scenes, all the university administrators are working their hardest to get this over the line. Secondly, financial planning is complicated. I mean, we've spoken about one topic. So best thing you can get in life, in my opinion, is something look after your health, something to look after your wealth. I think you hit the nail on the head. You don't want to rely on a government grant when you're older one day And lastly, I think, before you make any choices, or why do I have to do anything? The two pot system, everything will happen in the back end. You don't have to opt in for anything. All of this will happen in the back end. So for you, you'll see your pension balance. It'll go up over time. You don't have to partake in a two pot system, but there is a backdoor if you needed to access some money. But for retirement funds, you want it to work in your favor, not against you. It's the most tax efficient investment you can have. If you leave it to retirement, don't let it work against you by accessing your money and now making a tax inefficient. And yeah, the last point I'd probably give off with this. It was such a great clip I saw the other day where they took people that were saving for retirement. They said to them, you cannot go into the grocery store and go buy whatever groceries you need to buy you're now in retirement that you think you might need for the month. And then they told them, oh, by the way, looking at what you've bought, maybe consider taking some items out, because you actually haven't saved enough for retirement based on your current savings. So think about future implications of what you're doing today. Think about your future self and the best person to help you do that, as a financial advisor.

Malika Petersen: 29:54

Thanks for that, Tiaan. I think my parting shot is that I'm reminded about concept that we've spoken about quite a few times on this podcast, actually, and it's the concept of delayed gratification. Yes, the reality is that this is, this is a withdrawal that should be used for real, real emergency. I almost want to go say life again, because it's going to impact your overall financial position. And I think that's very important. Remember on this podcast, our main aim is to get ourselves into a better financial position. So please, please, please, everybody consult your financial advisor before taking any decisions. And yes, let's stand for awesome retirements. I want to be, I want to be a rock star with a retired still

Arthi Rabikrisson: 30:40

Or living the rock star life. Definitely. Thanks for that, Malika. And with that, I would also like to thank Tiaan for joining us today, for sharing his wonderful insights, for sharing some of these stories as well. Please everyone do feel free to follow Tiaan on his famous Tiktok channel. i mean, if you've got the police stopping you, it's definitely famous Tiaan, where he unpacks the two pot system in a lot more detail. Okay,

Malika Petersen: 31:04

Yes, no. Tiaan is viral, everybody. And I mean, if you would, Tiaan, please just make sure that you give Arthi and I your autograph.

Arthi Rabikrisson: 31:12

Oh, please, yes.

Tiann Herselman: 31:14

You two the rock stars. I'm just, I'm in the presence of greatness, and I'm just so thankful.

Arthi Rabikrisson: 31:21

Well, you know, I'm sure people would say, ah Tiaan, you're probably trying to stir the pot a little bit here. What you're saying with some of the videos, because I've seen them. They look really cool. And I would say we need to actually stir the pot in order to galvanize into action. Well, actually, we've got three pot. Malika, if you think about the three pots to stir,

Malika Petersen: 31:40

I think you two are letting this pot boil over with the tangent that we all off on at the moment. So, yeah, it brings back a little bit.

Arthi Rabikrisson: 31:49

You know, we always like to Potter about on the show, but that's how we go with it.

Malika Petersen: 31:53

Absolutely, true true. I think I'm going to put my own pots on make some tea and reflect on this wonderful conversation that we've had today, and I'm sure that you will be doing the same lsteners,

Arthi Rabikrisson: 32:04

ah, definitely. I'm going to join you for that tea, by the way, until next time, everyone, ciao,

Malika Petersen: 32:09

Everybody, Ciao,

Tiann Herselman: 32:10

bye, bye on

Malika Petersen: 32:12

Sharing is caring

Arthi Rabikrisson: 32:14

and knowledge is power.

Malika Petersen: 32:16

Time for you to be daring

Arthi Rabikrisson: 32:18

and let your money confidence bloom like a sunflower.

Malika Petersen: 32:23

Thanks for joining us. We hope you found these ideas and guidance useful.

Arthi Rabikrisson: 32:28

Do subscribe, share and write a review, or send us comments. We would love to hear from you.

Malika Petersen: 32:35

Catch you on the next episode

Arthi Rabikrisson: 32:36

of the swan effect podcast.

Malika Petersen: 32:39

Bye for now.

Arthi Rabikrisson: 32:40

Ciao.