Two-pot Retirement System
Lock and secure your retirement savings with the Two-pot Retirement System. You get peace of mind with access to cash in an emergency while protecting your long-term retirement goals.
Two-pot Retirement System
Lock and secure your retirement savings with the Two-pot Retirement System. You get peace of mind with access to cash in an emergency while protecting your long-term retirement goals.
OVERVIEW
What is the two pot retirement system?
Starting 1 September 2024, South Africa's retirement savings landscape will see a significant change with the introduction of the Two-pot Retirement System.
Too many South Africans cashout their retirement savings when changing jobs, leaving them unprepared for retirement and reliant on a government pension grant. To address this, and to encourage a savings culture that will help build financial security, Government implemented the Two-pot Retirement System. This system divides your retirement savings into three components: vested, savings, and retirement.
It offers you emergency access to part of your savings while ensuring the rest is preserved for your retirement.
TWO-POT EXPLAINED
How will it work?
Vested
Pot
Before 31 Aug ‘24
10% of your retirement savings or R30,000 whichever is the lowest, will be transferred to the savings pot. The rest will be protected, and the two-pot rules will not apply to it.
There will be no vested pot for new retirement savings or funds if you start saving after 1 September 2024.
Before you retire
Your money is locked in until age 55. You cannot withdraw it before then, but we will allow access in some situations.
Being unable to work because of a permanent disability or passing away are two of them.
When you retire
You may take up to one third of the retirement savings in this pot and a lifetime tax-free limit applies.
You must invest the rest to give you an income for life and will be taxed according to legal requirements.
Savings
Pot
After 1 Sep ‘24
One-third of your retirement contributions will go into your savings pot. You can tap into this pot once every tax year, in an emergency.
Before you retire
You have access to the money before age 55 and should only use it for emergencies. The minimum withdrawal amount is R2 000. You will be taxed on the withdrawal amount and will also pay admin fees.
When you retire
You may withdraw this money when you retire. The lifetime tax-free limit applies.
Retirement
Pot
After 1 Sep ‘24
Two-thirds of your contributions will go into your retirement pot.
Before you retire
Your money is locked in until age 55. You cannot withdraw it before then, but we allow access in some situations. Being unable to work because of a permanent disability or passing away are two of them.
When you retire
You must invest the total retirement savings in this pot to give you an income for life. You pay tax on the total income you get.
Why is it important?
The money in your savings pot should be reserved for retirement and only be used in emergencies. By keeping as much money as possible in your retirement savings, you will ensure a more comfortable retirement. Any withdrawals from your savings pot will reduce the money available at retirement to secure an income for life.
The two-pot system can protect your retirement savings.
The savings pot gives you access to cash in an emergency. This can help you avoid dipping into your retirement savings too early, which can reduce the amount of money you have available when you retire.
The retirement pot is locked away until you retire. This helps protect your retirement savings from being accessed too early or lost due to financial difficulty.
