Two-pot system withdrawal limit, two-pot system withdrawal limit in south Africa, how to apply for two-pot system online withdrawal, two-pot system 2024 withdrawal, two-pot retirement system implementation.
Two-pot system
This new system divides your retirement contributions into two parts: a savings pot and a retirement pot. Your existing retirement savings will be placed in a third pot called the vested pot.
The Two-Pot System aims to help you save for retirement while also providing a safety net for emergencies. This means you can access a portion of your savings during tough times without compromising your long-term financial goals.
Get to grips with the 2 Pot Retirement System
From 1 September 2024, you will be able to access funds from your retirement fund while protecting most of your savings for retirement.
Two-pot retirement system implementation
The Two Pot System marks a significant change to South Africa’s retirement landscape. It’s designed to provide you with a safety net in times of financial crisis while encouraging long-term savings.
All your future contributions to your retirement fund will be split into two pots: a savings pot and a retirement pot. Your current retirement savings until 31 August 2024 will remain preserved in a vested pot.
- One-third of your retirement contributions from 1 September 2024 will go into your savings component
- You can withdraw* from this pot once every tax year
- The minimum withdrawal amount is R2 000, taxed at your marginal income tax rate
- No maximum limit to the amount you can withdraw
- You will also pay an administration fee for any withdrawal.
Making a withdrawal has a big impact on your future. Take your time and think it through carefully, or consult your financial adviser.
How does it work?
Savings pot
- One-third of your contributions will go into your savings pot. You can make withdrawals once every tax year.
Retirement Pot
- Two thirds of your contributions from 1 September 2024 will go into your retirement component
- You can only access your savings at retirement
- Ensures you have enough money to enjoy your golden years.
Vested Pot
- Your retirement savings up until 31 August 2024
- On 1 September 2024, 10% of your retirement savings or R30 000, up to a maximum of R30 000, will be transferred to the savings component
- Savings protected until you retire, or
- You can access all your savings when you change employers
- No further contributions can be made to your vested component from 1 September 2024.
Two-pot system withdrawal limit
How much of my savings goes into the savings pot?
Of your retirement savings up to 31 August 2024, 10% (up to a maximum of R30 000) will go to your savings pot. After 1 September, one-third of your contributions will go into the savings pot, while two-thirds will go into the retirement pot.
How often can I withdraw from the savings pot?
You can withdraw from the savings pot once every tax year.
Will I pay tax on withdrawals from the savings pot?
Yes, withdrawals from the savings pot are subject to income tax. Your withdrawal will be taxed at your marginal tax rate. Additionally, any income tax you owe to SARS will be deducted from your withdrawal amount through a tax directive issued by SARS upon withdrawal.
Can I use the savings pot to pay off debt?
Yes, you can. You can use any funds you choose to withdraw for whatever purpose you choose. Some South Africans are planning to use their withdrawals to settle arrears or pay off debt. If you are considering this option, it’s important to weigh up the impact on your long-term retirement goals, as well as the tax impact of withdrawing from your savings.
Can I use the savings pot for a specific expense?
You can use the savings pot for a specific expense, but it’s important to note that this can affect your retirement savings. Also always keep in mind that you will pay tax on your withdrawal, which will impact the amount you have available for any expenses.
Two-Pot retirement system calculator is now available
The calculator will assist pension fund members with an illustrative amount of what they can possibly expect as a payout. All relevant and accurate information must be provided to get a clear estimate of the payout. See the two-pot calculator here.