SARS registration and compliance required before two-pot retirement withdrawals

Lester Kiewit speaks to Edward Kieswetter, Commissioner at the South African Revenue Service (SARS) about the two-pot retirement system.

On 1 September, the two-pot retirement system will be activated.

Essentially, the two-pot retirement system refers to your retirement savings being split into two ‘pots’:

Your savings pot, from which you can withdraw a minimum of R2000 and a maximum of R30 000 or 10% (whichever is less).
Your retirement pot will be locked and only accessible when you turn 55.

Withdrawals can only be made once every tax year and each withdrawal will be taxed by SARS.

SARS announced that people intending to withdraw from the savings pot must be registered for tax.

You also have to be tax compliant with no outstanding returns or fines before you're eligible to make withdrawals from your retirement fund/s.

If a person is not registered for tax, the request for a tax directive sent from the fund to SARS will be rejected.

You will be taxed on withdrawals from any retirement fund, so you will not receive the full amount you withdrew.

"It fills me with a level of concern that people are able to access money that was destined for retirement and create an additional self reliance when you can't work anymore. But in a country where many are struggling to survive, this is a means for some relief. I would hope the money will be used for things that are important like school fees or health services and not for luxury expenditure."

- Edward Kieswetter, Commissioner - South African Revenue Service

Scroll up to the audio player to listen to the full conversation.