Why is the two-pot retirement system being implemented?
The two-pot retirement system is part of the governments overall retirement reform program set to improve retirement outcomes for all South Africans. The long-term goal of a retirement fund is to prioritise towards retirement but the reform program allows members to access the savings portion of their retirement benefit only for unexpected expenses and during financial distress.
What does the two-pot retirement system mean for me?
Your retirement savings will be split into three different components: a vested component, a retirement component and a savings component.
All savings up to 31 August 2024 minus the seed capital will move to this pot.
- No new contributions can be made.
- Should you leave your employment, you can choose to preserve the money in the retirement fund or transfer it to another approved retirement fund, or receive the funds in cash.
As of 1 September 2024, this pot will receive two-third of new contributions.
- Remain invested until age 55 for future financial security.
- You cannot withdraw from these funds once you resign or retire unless the value of the fund falls below the threshold of R 165,000
As of 1 September 2024, this pot will receive one-third of new contributions.
This pot will also be seeded with 10% of your existing investment value, capped at R 30,000.
- You can only make one withdrawal per tax year (1 March to 28/29 February).
- Withdrawals are taxed as part of your income for that year.
Try our two-pot calculator
See how the new system will impact your retirement, as well as any impact on an initial withdrawal.
Case Study - Initial Impact
Andy currently has R 5,000,000 invested in a pension fund, he contributes R 15,000 each month through a company pension. Illustrated below is the initial impact two-pot will have on his retirement savings.
Impact to savings on 1 September 2024
Andy's pension fund
Vested component
Savings component
Retirement component
Monthly contributions after 1 September 2024
Vested component
Monthly contribution
Monthly contribution
Savings component
Retirement component
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Download our two-pot system brochure
To find out more about the two-pot retirement system, read the 10X brochure.