Celeste Martin9 June 2024 | 9:27

Two-pot retirement system: Read this before you withdraw your funds

Here's how the new changes could affect your pocket and savings.

Two-pot retirement system: Read this before you withdraw your funds

Retirement Planning, Personal Finance, 123rf.com

Gugs Mhlungu spoke to Certified Financial Planner, Paul Roelofse.

Listen to their conversation in the audio clip below.

President Cyril Ramaphosa recently signed the Revenue Laws Amendment Bill into law, stating that it will provide protection and dignity to those needing financial relief.

The amendment introduces a two-pot retirement system, enabling employees to access limited portions of their pensions without resigning.

Roelofse says this is an important development in our financial future and we need to ensure we understand the new changes.

He explains in his latest article how your retirement funds will be affected come 1 September 2024:

The Vested Component

Your total retirement fund as at the 31st August 2024 will vest and be made fully available to you as before where you can:

  • Stay a paid up member
  • Withdraw and take the cash 
  • Transfer to another fund

The Savings Pot

10% of the vested fund up to R30 000 will be transferred to a savings account which will start from 1 September 2024.

One-third of your future retirement contributions will be allocated to this savings account with the following conditions:

  • Withdraw a  portion or in full
  • Once a year
  • A minimum of R2000

A tax directive will be applied and the amount is added to your taxable earnings for the tax year.

SARS will take any outstanding taxes owed before releasing the remainder of the withdrawal. 

"There is an anticipation that a lot of people are going to try and access it from 1 September. Administrations in all the retirement funds are all gearing now already for it..." 
- Paul Roelofse, Certified Financial Planner
"Look at it as an access of last resort...It's really not supposed to be a piggy bank, it's really designed for emergencies like COVID."
- Paul Roelofse, Certified Financial Planner
"The tax you're going to pay on it is quite high."
- Paul Roelofse, Certified Financial Planner
"Let it grow, let it go, don't touch it if you can leave it."
 - Paul Roelofse, Certified Financial Planner

The Retirement Pot

Two-thirds of your future contributions from the 1 September will be invested in a retirement component which will only be available as a pension for you at retirement. 

"The retirement pot is one that you cannot touch. It's there for you for the rest of your working career until one day when you retire. It will be there designed to give you a pension for the rest of your life."
- Paul Roelofse, Certified Financial Planner

For more financial tips, visit Roelofse's website at www.investforlife.co.za


Scroll up to listen to the full interview.