A smiling middle-aged woman standing over her husband’s shoulder, with coffee in hand, while they review the terms and eligibility of his retirement annuity on the computer screen for two-pot.

Two-pot retirement system on the Traditional platform

The introduction of the two-pot retirement system aims to improve retirement outcomes through compulsory preservation of retirement money while allowing access to part of that money before retirement in case of financial emergencies.

Access to part of your money is subject to the system's rules, implemented on 1 September 2024.

Retirement annuities eligible for withdrawals under the two-pot system

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Legacy retirement annuities are excluded from two-pot. A legacy retirement annuity is defined as any reversionary bonus policy or any other retirement annuity with cover, where the life cover was greater than the fund value on 1 September 2024.

Reversionary bonus policies are policies with a sum assured, which is increased by the declaration of bonuses. Bonuses may be declared yearly and an additional bonus may be declared at the end of the policy term. Unlike policies with an underlying fund value, reversionary bonus policies define the benefit in terms of the original sum assured plus the accumulated bonuses.

Most retirement annuities include only a savings element, meaning the money you contribute to the policy is invested to provide an income for retirement. Some retirement annuities also include life cover, which provides a benefit if the policyholder passes away before retirement. In such cases, where the life cover exceeds the investment value, the policy will not be included in the two-pot system.
All other retirement annuities are included in the two-pot retirement system.
Pension preservation policies are automatically included.
Provident preservation policies of members that were younger than 55 on 1 March 2021, are automatically included. Provident preservation members that were 55 or older on 1 March 2021, have the option to opt-in to have their policies included in the two-pot system. It is important to note that members can only opt-in on or before 31 August 2025.

If you are unsure whether your policy is included, our friendly service team is here to help! Contact us and we'll gladly assist you in checking the status of your retirement policy.

Two-pot FAQs

How does the two-pot system work?

Savings component

On 1 September 2024, 10% of the fund value of your policy, up to a maximum of R30 000, was allocated to the savings component. This is called 'seed capital'. One-third of your premiums will be allocated to this component after implementation. You have access to the savings component once every tax year, but have to withdraw a minimum of R2 000, if you want to make a withdrawal. These withdrawals will be subject to tax and fees.
Retirement component

This component started with a zero balance on 1 September 2024. After implementation, two-thirds of your premiums will be allocated to this component. For your future financial security, you may not access funds from this component until retirement.
Vested component

Your policy's value, as calculated on 31 August 2024, less the amount allocated to the savings component, will be held in the vested component until your retirement. The money in the vested component may not be accessed until retirement and will continue to be subject to all the previous (before two-pot) rules and benefits.

What are your options at retirement if your policy is included in the two-pot system?

From age 55, early retirement is available.

For both early retirement and regular retirement, you can take the full proceeds as a lump sum payment, if the sum of the retirement component plus two-thirds of the vested component for all your retirement policies in the same retirement fund, is less than R165 000.

If two thirds of the vested component plus the retirement component is more than R165 000, then only a third of the vested component and the full value in the savings component can be taken as cash and the remainder must be used to purchase an annuity.

When can you withdraw from your savings component and how much can you take?

You will be able to make a withdrawal of a minimum of R2 000 from your savings component, once every tax year, provided the amount in your savings component is R2 000 or more, if:

your retirement annuity policy is included in the two-pot retirement system;
you have a pension preservation policy;
you were younger than 55 years on 1 March 2021 on your provident preservation fund policy or
you were 55 years or older on 1 March 2021 and opted-in on your provident preservation fund policy.

Only 10% of your fund's value as of 1 September 2024, was allocated to your savings component, to a maximum of R30 000. (This means that if your fund value was less than R300 000, you will not have R30 000 available to withdraw.)

There are fees and tax on every withdrawal. The amount of tax we have to deduct, depends on the tax bracket you fall in and whether there are outstanding taxes due to SARS. We have to request a tax directive from SARS, where they will instruct us on the amount of tax we have to deduct.

For example, if the fund value as of 1 September 2024 was R180 000, only R18 000 would have been allocated to the savings component. This will initially be the maximum amount that can be withdrawn (before tax and fees). This amount can still change with investment growth. In the case of a retirement annuity where ongoing premiums are paid, we will also allocate one-third of the premiums after 1 September 2024 to the savings component. It is important to remember that we still have to deduct tax and fees from the savings component when you make a withdrawal. In this example, if the person withdraws the maximum amount of R18 000 from the savings component, the person will receive less than R18 000 in their bank account.

If a person withdraws the maximum amount in the first tax year, it will mean that for:

A preservation fund policy - nothing will be left to withdraw in the following tax years.

A retirement annuity policy - only one-third of the premiums until the next withdrawal, with growth, will be available for withdrawal in the following tax year (if it is more than the minimum withdrawal amount of R2 000).

How do withdrawals from your retirement fund impact your retirement planning?

Every withdrawal has a direct impact on your retirement savings, because it reduces the amount you will have available to retire with. You will also lose out on the future growth on the amount you are withdrawing. If the benefits of your policy is linked to the value of your fund, a withdrawal will also reduce the active benefits you have in the policy. Here is an example to demonstrate the possible results of three different scenarios:

Mrs Naidoo, Mr Smith, Ms Dlamini and Ms Mazibuko each have a retirement annuity with an existing fund value of R150 000 and 20 years until their chosen retirement date. All four of the members contribute R1 000 every month, with a 5% increase in contributions each year. They are all members of the same retirement fund and receive 10% growth per year. Ms Mazibuko, however, has a legacy retirement annuity and will therefore not be included in the two-pot retirement system.

On 1 September 2024, the seed capital was allocated to the savings components of Mrs Naidoo, Mr Smith and Ms Dlamini and the rest of their money was allocated to their vested components where it will grow with 10%, until retirement. From 1 September 2024, their contributions will be split: two-thirds will be allocated to their retirement component, which they may not use until retirement; and one-third will be allocated to their savings component, which they can access once per tax year. Ms Mazibuko will only have a vested component on- and after 1 September 2024, because her policy is not included in the two-pot system.

The table below shows the difference in the total value of the retirement savings for each of these persons at retirement age of 60.

A table comparing the two-pot withdrawal behaviour of 4 people and difference in the total value of their retirement savings at the retirement age of 60.

Ms Dlamini and Ms Mazibuko have the same amount of total retirement savings, even though Ms Dlamini is included in two-pot and Ms Mazibuko is not. This is because Ms Dlamini did not make any withdrawals from her savings component.

*Note 1: All values in this document have been rounded. *Note 2: The table does not show the reduction in benefits if any benefits are linked to the value of the retirement fund. *Note 3: Individuals earning more than R240 000 a year, will pay tax at a marginal rate of between 26% and 45% on early withdrawals from their savings component. This would likely be more than the tax a person will pay if they only withdraw from the savings component when they retire. On retirement the tax rate would vary between 0% and 36%.

How to withdraw money from your two-pot savings?

You must be registered with, and obtain a tax number from the South African Revenue Service (SARS).
Call us on 0860 669 876 or email your request to [email protected].
If you have a preservation fund policy, it is important that you indicate whether you want to make a once-off withdrawal (if you haven’t done so already) from the vested component or if you wish to make a withdrawal from the savings component. Remember that you have the option to make one withdrawal from the vested component during the life of the policy. The once-off withdrawal can be any portion, up to 100% of the value of the policy. Speak to your financial adviser to find the best option for you in your situation.
Because some of our retirement annuity policies are not included in the two-pot system and clients with provident preservation fund policies needed to opt-in to the two-pot system before 31 August 2025, if they were 55 or older on 21 March 2021, our service team will let you know whether or not your policy is included in the two-pot system. The service specialist will also let you know if the minimum withdrawal value of R2 000 is available and whether you have already made a withdrawal in the current tax year.
We will calculate the available maximum withdrawal value and send you a written quote.
Consider the impact that the withdrawal will have on your retirement planning and what the result will be on the amount that will be paid to you after we deducted tax. If you still want to continue with a withdrawal, please complete the form called Application for a withdrawal from the savings component (Traditional retirement annuities and preservation funds only) and email it to us.
We will process your request and let you know if any further documentation or proof is needed for FICA purposes.
When we have all the required information, we will request a tax directive from SARS. Please note that once we have requested the tax directive from SARS, the transaction may not be cancelled, changed or reversed. The applicable tax will be deducted from the withdrawal amount and SARS might instruct us to deduct outstanding tax through an IT88 deduction order.
The withdrawal amount, less the tax, will be paid to you.

Contact Momentum Traditional

Momentum Traditional

0860 669 876

+2711 505 1555

[email protected]

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