The two-pot retirement system aims to address the low level of retirement savings in South Africa by introducing a new way of managing retirement fund contributions. The system allows for some flexibility in accessing a part of the savings in case of financial emergencies, while ensuring that most of the savings are preserved for retirement.
On 31 August 2024, seeding capital from an individual's existing retirement fund savings was allocated into a savings pot. This was a once-off amount of 10% of the total value of their vested pot, limited to R30 000. Withdrawals from the savings pot are allowed once every tax year and encouraged only in the event of financial emergencies. Every withdrawal is considered taxable income and subject to an individual's marginal tax rate (up to 45%). A transaction fee may also be charged for every withdrawal.
Frequently Asked Questions
Read our quick and easy-to-understand FAQs for more insight into South Africa's new two-pot retirement system. Understand the full picture and take control of your financial future and retirement planning.
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