Effective Date
1 September 2024
Understanding the Two-Pot System
More flexibility. More control.
The two-pot system allows members to withdraw a portion of their retirement savings without needing to leave their job or retire.
10% Transfer
As of 31 August 2024, 10% of your total fund value will be transferred to your savings pot, up to a maximum of R30,000.
Minimum Withdrawal
You can withdraw a minimum of R2,000 from your savings pot per tax year, provided there are sufficient funds available.
Please note that each withdrawal will be subject to charges, including income tax and administrative fees.Two-Pot Retirement System Calculator
Why do we need the two-pot system?
These changes are needed because many members struggle financially before they retire and are also not saving enough for retirement. Currently, members often withdraw their retirement savings in cash when they change jobs. Because of withdrawing from their retirement savings, they don’t have enough to live on once they retire. The two-pot system will help members keep their savings invested for their retirement.
What will happen to my existing retirement savings?
Before 1 September 2024, your retirement savings will not be affected by the new two-pot system. You can only withdraw cash from these savings if you leave your employer or retire.
After 1 September 2024, a small amount of your existing retirement savings will be moved to your new savings pot.
The three components
Vested Pot
No new contributions will be invested in this pot after 31 August 2024.
Savings Pot
1/3 of all contributions received from 1 September 2024 will be allocated to the Savings Pot.
Retirement Pot
2/3 of all contributions received from 1 September 2024 will be allocated to the Retirement Pot. The amount in the retirement component is preserved until retirement.
Some of your existing retirement savings will be moved to your new savings pot
- Members 55 years and older as at 1 March 2021 will have a choice to opt into the new system or stay in the current system.
- 10% of total fund value as at 31 August 2024 will be seeded to the savings pot.
New withdrawal options effective 1 September 2024
Under the new two-pot retirement system, there are changes to members’ withdrawal options on resignation, dismissal, or retrenchment.
From 1 September 2024, members will no longer be able to take their total retirement savings in cash when they exit the Provident Fund.
Vested Component
Members can still withdraw their Vested Component in full. Withdrawals are taxable according to the Withdrawal tax table or Retrenchment tax table, whichever applies, subject to the relevant tax-free provisions.
Savings Component
The Savings Component only allows for one withdrawal to be made in a tax year. If the remaining balance is above R2,000, the member will have to wait until the next tax year. If below R2,000, the savings component may be taken as part of withdrawal.
Retirement Component
This portion cannot be accessed until retirement. Members may stay in fund as a paid-up member or transfer the retirement component tax free to another retirement fund.
The information provided is accurate as of the date of publication and will be reviewed and updated on a regular basis to reflect any changes in legislation.Need more information?
Visit our FAQ or contact our team for assistance.