There have been many debates going on about pension reforms and raising the retirement age in South Africa in the year 2025. Some news outlets went so far as to say major changes were taking place and that the retirement age would be just raised to 65 across the board, because official sources rightly stated that no such blanket legal changes have been effected. However, various changes are taking place concerning pension laws and retirement-fund regulations (witnessed by Amendment No. 5 of 2024 to the Pension Funds Act), the two-pot implementation bill being one among them.
What is, in fact, already confirmed: No uniform legal change yet
In some of these phenomenal press reports, it is alleged the government has given an overhaul to retire anybody anywhere in industry at 65 years; there is no gazette notification of any such initiative issued so far. With public-service-retirement age, under the Public Service Act, 1994, it remains working at a basic 60 years of age, with early retirement allowed from 55. In private employment, the government does not prescribe a mandatory age for retirement. Rather, generally, the age for retirement is agreed upon by the parties themselves; this age may be enumerated in the employment contract or determined by the rules of the occupational retirement funds. Any unilateral attempt to alter the retirement age on the part of either employer (for instance, increasing an employee’s retirement age without that employee’s consent) will almost certainly be unlawful, under labor law, and will likely be treated, ipso facto, as constructive dismissal or unfair discrimination.Key Reforms Under Pension and Fund Rules and a Two-Pot SystemAlmost no legislation is there that affects the general retirement age, whereas more extensive changes have been brought in with respect to the use of retirement or contribution funds.
The Two-Pot Retirement System
The procedure in terms of the April 2024 reform is that retirement fund contributions are split into:-
- A savings pot (one-third), which can be withdrawn early before retirement under certain circumstances.
- A retirement pot (two-thirds), which stays locked until retirement age.
- It is aimed at safeguarding members’ long-term savings while offering them some degree of flexibility should they find themselves in an emergency situation.
The amendments brought to the Revenue Laws Amendment Bill (RLAB) of 2025 are aimed at clearing anomalies related to seeding, timing, and calculation with regard to the various retirement funds.
Likely Changes (But Not in Stone)
- With worries about demographic pressure and the sustainability of the present fiscal system, some of the possible reforms could include the following:
- Alignment of the retirement age: Some studies suggested that the common 65 retirement age for the private sector should also be applied to the public sector.
- Phased/part-time retirement: Working half-time and taking a half pension are some possibilities.
- Over-retirement work in needed sectors: Older workers can be returned to work if there is a shortage of skills in that specific sector.
- Yet none of these have been legislated or enshrined in statute. They are still at a discussion level and need parliamentary approval and implementation through formal enactment.
That Is To Be Watched For and What Needs Doing
For Employees and Prospective RetireesLook into employment contracts and fund rules with respect to the starting time for “normal retirement age.” Can these be altered? Follow the progress of bills (e.g., RLAB) and regulations. If you are approaching the “traditional retirement age” (say, about 60), be careful about making irrevocable decisions before reforms are finalized.
also read: R4,500 SASSA Grant Increase 2025: 7.8 Million Pensioners To Benefit, Dates Revealed