Investo two-pot retirement system FAQs

From 1 September 2024, all your retirement contributions will be split in 2:

• One-third will go to your savings component, which you can access once a year.
• Two-thirds will go to your retirement component, which you may not use until retirement.

Your retirement money saved up until 31 August 2024:

• Your “old” savings will stay in your “vested component”.
• On 1 September 2024 we pay 10%, up to a maximum of R30 000, of this money to your “savings component”. It is your own savings, it is not sponsored by government or Investo.
• This “seed capital” will be the opening balance in your savings component. This transfer will happen only once and not again in future.
• You can withdraw from the savings component once a year between 1 March and the end of February. The withdrawal amount must be more than R2 000, but there is no limit – you can withdraw all the money in your savings component.

At retirement:

• You can take what is left in your savings component and one-third of your vested component as a lump sum. The first R550 000 is tax-free.
• You will use your retirement component and any other money that is left to buy a product that will give you a monthly income.

What to keep in mind:

• Your retirement money will be reduced by the amount you withdraw.
• You will also lose the yearly growth you used to earn on this amount.
• You will pay tax on the amount you withdraw, at the rate you pay on your income, that is at your marginal tax rate.

If you contribute R1 200 a month to a retirement annuity fund, R400 goes to the savings component and R800 goes to the retirement component. You can withdraw from the savings component once a year, if the amount is at least R2 000.

It is very important that we have your latest information:

• Cell phone number
• Email address
• Residential address
• Tax number

During the withdrawal, we will also ask for the following:

• Your bank account details
• Your yearly taxable income before deductions
• Any political affiliations

You can read all about how to withdraw in the two-pot withdrawal guideopen_in_new.

If you are taxed on your income at 25%, you will pay tax of R7 500 when you withdraw R30 000. This means you will receive only R22 500 in your pocket. If you owe SARS money, they will take it from the amount you withdraw. Make sure that you enter your correct monthly taxable income when you withdraw to avoid later tax surprises.

This will depend on your personal circumstances and your remaining time to retirement. As with all other financial decisions, please speak to your financial adviser if you withdraw from your retirement money before retirement.

It may be in your best interest.

The power of compound interest, when you earn interest on your investment, plus interest on the interest, means that the more you invest, and the longer you invest, the faster your money can grow. That’s why we suggest that you try to repay any money you withdraw (including the amount you were taxed), plus the interest you would have earned while your money was outside your retirement fund. You don’t want to compromise your retirement savings because of short-term challenges.

Your financial adviser can calculate how much growth you will lose until retirement because of a withdrawal. Technically, you will have to increase your contribution to make up for the loss, or if you pay it back as one big sum, one-third will go into the savings component and two thirds will go into the retirement component.

One should withdraw from retirement money only in emergencies.

Yes. You can make one withdrawal per tax year at any time. You may withdraw the entire balance from your savings component, provided the withdrawal is at least R2 000.

You can make one withdrawal per tax year, with a minimum of R2 000. Ensure we have your correct tax number and personal details. Your withdrawal will be taxed, and if you owe SARS, the amount owed will be deducted before the payout.

You may withdraw once during the tax year (From 1 March until the end of February), at any time during the year, not only on 1 March.

You will Log into momentum.co.za select Investments and Savings and then select your Investo Retirement Annuity.

The amount you may withdraw will show on your Investo Retirement Annuity investment statement. Log into momentum.co.za to see the statement. If you haven’t logged in before, register with a username and password.

We charge R200 for the transaction.

Yes. You pay the tax rate your income is normally taxed on, your so-called marginal tax rate. We must first apply for a tax directive. If you owe the SARS money, they will take it from your withdrawal amount and pay you the rest.

We must first sell from your investment. We must also apply for a tax directive. You won’t have your money in a few days as we are also dependent on the SARS.

Yes, if they fall under the two-pot system. Some older retirement annuities don’t qualify.

Yes. Your financial adviser can use our calculators to illustrate the effect.

• On 1 September 2024, the opening balance in your savings component will be equal to 10% of your money you have saved up to 31 August 2024, but only up to R30 000.
• The minimum amount you can withdraw from your savings component is R2 000.
• There is no maximum; you may withdraw everything in your savings component.

It's best to remember that retirement money should be for retirement. The longer it stays invested, the more it can grow to ensure that you have a comfortable retirement.

If you have saved R50 000 on 31 August 2024, the opening balance of your savings component on 1 September 2024 will be R5 000. This is what you can withdraw, but you will pay tax on it.

No. The 10% seeding money happens only once, on 1 September 2024. After that, the only money going into your savings component will be one-third of your contributions.

You can take a lump sum, and it is currently taxed as follows:

• The first R550 000 is tax-free.
• The next R220 000 is taxed at 18%.
• Another R385 000 is taxed at 27%.
• The amount above R1 155 000 is taxed at 36%.

The rest of your savings you will use to buy a product, called an annuity, that will give you a regular income. At the time, your financial adviser can look at your circumstances and recommend the best annuity to buy.