Two-pot withdrawals to add R6.7m to fiscus after just one day

The Alexforbes website had a notice warning of “high traffic volumes on AF Connect".

By Neesa Moodley

3 Sep 2024

SARS processed almost 2,500 tax withdrawal directives on the first day alone, while some fund administrators battled with system crashes as members flooded them with withdrawal requests.

SA Revenue Service Commissioner, Edward Kieswetter, said on Tuesday morning that up until the weekend, SARS was focused on ensuring that, through the use of AI-driven rules, tax directives could be issued in the same amount of time as an assessment – under five seconds using AI.

“The three things that would prevent that would be if you were not registered for tax, you have outstanding returns or you owe SARS money. So, we tried to address that ahead of the two-pot system coming into effect,” he said, adding that by Monday night, SARS had received 2,759 tax directives.

Of those, SARS had already processed 2,424 tax directives by Tuesday morning, requesting R103-million worth of withdrawals from retirement funds and delivering R6.7-million of tax to the fiscus.

Despite months of preparation and consumer education, at least two pension fund administrator websites crashed on Monday and Tuesday this week as their systems battled to cope with an unprecedented number of call volumes as members tried to access to two-pot retirement withdrawals.

The Alexforbes website had a notice warning of “high traffic volumes on AF Connect”, while a disgruntled consumer on X complained: “So, the Alexander Forbes call centre says that one can leave a message and that they will respond within 48 WORKING HOURS. ? ?”.

two-pot system The Alexforbes website had a notice warning of high traffic volumes on AF Connect.

John Anderson, executive of solutions and enablement at Alexforbes, confirmed that the administrator has temporarily increased the standard turnaround time from 24 hours to 48 hours because of the high volumes of enquiries.

“We have increased our capacity to attend to all calls, but it is prudent to manage client expectations at this initial stage. We request members to please be patient; the turnaround time will reduce once these extraordinarily high volumes reduce,” said Anderson.Alexforbes did not supply a number when it came to enquiries for 2 September, other than to say it had seen a “very high volume of claims”. All withdrawal applications are being handled via the member platform AF Connect on the Alexforbes website.

Anderson said he anticipates somewhere between three to six times the annual number of claims the administrator would normally process, with the expectation of handling this volume in a much shorter space of time.

“Given this exceptionally high volume of claims, as well as the fact that the introduction of the two-pot system is a significant change in the industry and our operating environment, we anticipate initially that the processing timeframe is up to 20 working days from the full completion of each withdrawal application,” he said.

Volumes expected

Michelle Acton, retirement reform executive at Old Mutual, said the company observed 93,000 consumers interacting on its WhatsApp channel on Monday alone, with “absolutely no performance issues”.

“We have had thousands of calls to the call centre, but at this stage, we are managing well, and we planned appropriately for the expected volumes,” she noted.

Old Mutual has split the process into two phases initially. From 2 September to 22 September, members will be able to view their savings, retirement and vested pot balances via the Old Mutual WhatsApp channel. This means they can see exactly how much is in each pot and what is available for withdrawal from the savings pot. The WhatsApp channel can also provide an estimated tax amount. However, to determine the exact tax payable, Old Mutual will apply for a tax directive from SARS.

From 22 September, the Old Mutual channel on WhatsApp will start accepting withdrawal applications. Once an application has been received, it will undergo a vetting process to ensure that the personal details supplied match the information in the Old Mutual system.

“We want to remind customers that the process from application to receiving money in their bank account may take some time because of the large volumes we expect, and to accommodate the SARS process to issue tax directives,” Acton cautioned.

two-pot

Some fund administrators have asked clients to be patient until call volumes are reduced.

NMG Benefits is also making use of a WhatsApp channel, and Siphamandla Buthelezi, head of platforms, said the company had received about 1,100 claims via the WhatsApp channel by close of business on Monday.

Although NMG is also making use of a web portal, applications and enquiries are mostly flooding in via WhatsApp. Buthelezi says NMG expects to start paying out claims from Friday this week.

Zareena Camroodien, departmental head: fund governance and trustee conduct at the Financial Sector Conduct Authority (FSCA), said the regulator had received 846 applications for rule amendments relating to the two-pot system.

“We have registered 748 of these rule amendments, representing approximately 88% of the total received. Of the remaining 98 applications, 89 are pending due to queries that have been raised and nine are new submissions that were received after 24 August 2024 and will be attended to.

“Responses to queries that were received are under consideration. The FSCA hopes to conclude all outstanding applications by the end of this week,” she said. DM

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Volumes expected