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A couple in their retirement years sitting with their financial adviser chatting about the two-pot retirement system. A couple in their retirement years sitting with their financial adviser chatting about the two-pot retirement system.

How two-pot withdrawals will work

The two-pot system for retirement funds is designed to provide more flexibility by allowing members to access a portion of their savings in emergencies while ensuring long-term savings for retirement. We have drawn up a list of the most pertinent questions you may have.

You have the responsibility to decide what you see as “an emergency”. It will be great to have emergency money when you are in dire straits. But if you use the pension money for a spending spree, you may endanger your retirement position in the long run.
  • On 1 September 2024, the opening balance in your savings component will equal 10% of your retirement benefit as of 31 August 2024, but only up to R30 000.
  • The minimum amount you can withdraw from your savings component is R2 000.
  • You may withdraw everything in your savings component.

On 1 September 2024, the amount available in your savings component will equal 10% of your benefit as of 31 August 2024, but it will be limited to R30 000.

If for example you have R50 000 on 31 August 2024, the opening balance on 1 September 2024 will be R5 000. If you have R500 000 on 31 August 2024, the opening balance will be R30 000. From 1 September 2024, 1/3 of all contributions will be allocated to your savings component.
  • You may withdraw once a tax year, i.e. from 1 March to the end of February the next year.
  • You may withdraw at any time during the year.
Nothing. Your money will keep growing with compounded interest until your retirement date. If you would like, you may still withdraw from the money available in your savings component next year.

Yes. You will pay tax at the rate you normally pay on your income, i.e. at your marginal tax rate.

For example, if you earn R30 000 per month, you pay tax at 26%. That means if you withdraw R10 000 from your savings pot, you will pay tax of R2 600 and get just R7 400 in cash.

You can look up your yearly income and then look at the table on the SARS website: Rates of tax for individuals | South African Revenue Service (sars.gov.za). The percentage they indicate for your income range is the percentage SARS will use to calculate how much tax to subtract from the amount you withdraw.
  • You may pay a fee for the withdrawal.
  • The minimum amount you may withdraw is R2 000.
  • You won’t receive the withdrawal benefit immediately.
  • We must first sell the units and then ask SARS how much tax to deduct from the withdrawal benefit.
  • SARS will need your tax number. It is very important that you register for tax before you apply for a withdrawal, otherwise SARS will not be able to tell us how much tax to deduct from your withdrawal benefit.
  • If you owe SARS money, they will take it from the withdrawal amount.
  • The retirement fund will then pay the tax amount to SARS and pay out the rest to you.

No. The 10% seeding to your savings component is only done once, on implementation of the two-pot system, on 1 September 2024.

After that, the only money going into your savings component will be one-third your contributions.

The seeding is done per contract/policy. We will calculate the seeding based on the benefit in each of your contracts/policies as of 31 August 2024 and allocate it to the savings component of that contract.

You can then withdraw from each of these contracts/policies if the value in that contract/policy is more than R2 000. You do not have to withdraw from all your contracts/policies at the same time. You can, for example, make a withdrawal from 1 contract/policy in month 3 and then from the other contract/policy in month 6.

You can withdraw from each fund once a year.

In case you missed it

Find all our previous newsletters under one, easy-to-find space, for your convenience.

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