Two-Pot System: Frequently Asked Questions

Effective 1 September 2024, the two-pot system splits every new retirement-fund contribution into a Savings Component (one-third, which you can access once per tax year before retirement) and a Retirement Component (two-thirds, preserved until retirement). Savings you held before that date are protected in a Vested Component under the old rules.

You can withdraw any amount from R2,000 (the legal minimum) up to your full available Savings Component balance. There is no fixed rand maximum beyond your balance, but you may only make one withdrawal per tax year (1 March to end February), and larger withdrawals attract more marginal tax.

A pre-retirement Savings withdrawal is added to your annual taxable income and taxed at your marginal rate using the SARS Personal Income Tax tables — not the favourable retirement lump-sum tables. A larger withdrawal can push part of the amount into a higher bracket. Use our withdrawal calculator to see your exact effective rate and net payout.

On 1 September 2024 your fund seeded your Savings Component with 10% of your vested value, capped at R30,000. This once-off transfer from your existing savings gave the Savings Component an opening balance so you could make a withdrawal in the first tax year. It is not extra money — it came from your own fund value.

No. The two-thirds Retirement Component is preserved and cannot be accessed before retirement except in narrow statutory cases such as formal emigration after the required period. At retirement it must be used to buy an annuity that pays you a regular income.

Before your fund pays a withdrawal, SARS checks whether you owe tax. If you have outstanding debt, SARS can issue an IT88 directive instructing your fund to deduct what you owe from your withdrawal. This means your net payout can be lower than the after-tax amount. Check your SARS eFiling balance before applying if you are unsure.

Timelines vary by administrator and the speed of the SARS tax directive, but most funds pay out within a few business days to a few weeks after a complete application. A once-off processing fee usually applies per claim.

Yes. Retirement annuities are included on the same one-third Savings, two-thirds Retirement basis. Because RA contributions are often irregular, your Savings Component grows in line with whatever you contribute after 1 September 2024.

The Government Employees Pension Fund is governed by its own law and follows a separate legislative process and timeline for two-pot, with mechanics that can differ from private-sector funds. GEPF members should rely on official GEPF communication for the exact rules and dates that apply to them.

Treat it as a genuine last resort. Every withdrawal is taxed at your marginal rate today and permanently removes compounding growth from your retirement — often several times the amount withdrawn by the time you retire. Run your numbers through our withdrawal and retirement impact calculators, and speak to a registered financial adviser, before deciding.