What you need to know about the new two pot retirement system.

There is a lot of hype around the new two-pot retirement system that will be implemented in September 2024. But it is important to get all the facts before you make the decision as to whether to withdraw or not.

How will the two pot retirement system work?

On 31 August 2024, 10% of your accumulated retirement fund will be transferred to the savings component of your fund. This amount will be capped at R30 000.

From 1 September 2024, members can make a minimum withdrawal of R2 000 once during each financial year. It is important to note that the fund will charge members an administrative fee for each withdrawal.

It is also important to take into account that the amount that will be withdrawn will be subject to PAYE. This means that you will move to a higher tax bracket for the month in which the withdrawal is made, which can cause you to have to pay tax in at the end of the financial year.

We therefore advise you to consult your financial advisor before making a decision to find out how it will affect your tax.