Recent legislative changes are set to transform South Africa's retirement landscape and from 1 September 2024, the new two-pot retirement system will come into effect. The new system will divide your future retirement fund contributions into two distinct pots or components: the savings pot, the retirement pot, while your existing retirement fund savings will be retained in a vested pot. 

Meet your new retirement pots

Each pot will serve a different but valuable purpose in your retirement planning. For your convenience, we have included a summary below of the different pots. 

On 31 August 2024, seeding capital from your existing retirement fund savings (or the vested pot) will automatically be allocated into your new savings pot. This is a once-off amount of 10% of the total value of your vested pot, limited to R30 000. After seeding capital has been deducted, the remaining value of your existing retirement savings will be transferred into the vested pot. The vested pot will then be subject to the rules of the previous retirement system, including rules relating to accessibility and tax rates. Please note that once the two-pot system is implemented, no further contributions can be made into the vested pot. 

From 1 September 2024, one-third of your retirement contributions will go into the savings pot. You may withdraw from your savings pot once every tax year, however, please be advised that every withdrawal will be subject to your marginal tax rate (up to 45%) and you may be charged a transaction fee. 

We encourage you to continue saving for your retirement through the savings pot to benefit from compound interest and only withdraw in the event of a financial emergency. 

Earn more with compound interest

By consistently contributing for retirement and minimising withdrawals, you will benefit from long-term investment growth and compound interest, helping to maximise your retirement income. With compound interest your savings earn interest on both the initial amount and the accumulated interest.

What comes next?

Planning for the two-pot retirement system is underway across the retirement fund industry and at Nedgroup Investments, you will be able to manage your retirement pots in an easy and secure way. You will be able to monitor your balances through our digital platform. The ability to regularly review your pots will help you stay on track with your short-term and long-term financial goals.