The two-pot retirement system
Significant changes to your retirement fund took place on 1 September 2024. Don’t worry – we’ve got you covered with this easy-to-understand guide to the new “two-pot system”.
What’s the two-pot system all about?
The two-pot retirement system is a new approach to managing your retirement savings. It's designed to give you more flexibility while still protecting your future. This system allows pension and provident fund members to access part of their retirement savings before retirement if they're facing financial difficulties – without having to resign from their job. At the same time, it ensures that a significant portion of their retirement savings remains untouched, growing securely for the retirement years.
Who is affected by the two-pot system?
The two-pot retirement system applies to most retirement funds, including pension, provident, defined contribution, defined benefit, retirement annuity and preservation funds (pension and provident). The two-pot system does not apply to so-called legacy retirement annuity funds, unclaimed benefit funds, unclaimed benefit members, pensioners and beneficiary funds. It also does not apply to persons who were 55 years or older and who were members of a provident fund on 1 March 2021 and who are still members of that same provident fund. This latter category of members can choose whether to opt into the two-pot system or not.
How many pots are there in the two-pot system? Actually three!
The “seed capital” boost explained
On 01 September, 10% of your existing savings (up to R30 000) was moved to your savings pot to seed it. You will then be able to withdraw that money from your savings pot (as long as the balance in your savings pot is R2 000 or more).
Let’s look at some examples
Example 1: On 31 August 2024, Jane has R100 000 in the fund. 10% of R100 000 is R10 000, so Jane will have R10 000 in her savings pot on 1 September 2024.
She can withdraw up to R10 000.
Example 2: On 31 August 2024, Sipho has R18 000 in the fund. 10% of R18 000 is R1 800, so Sipho’s seeding balance will not be enough to meet the R2 000 minimum threshold for withdrawal.
Sipho cannot withdraw R1 800 but his saving pot will continue to grow because 1/3 (33%) of his contributions to the fund after 1 September 2024 will paid into his savings pot and as soon as his savings pot balance is over R2 000 he will be able to make a savings pot withdrawal.
Taking retirement savings out of your savings pot
You can take retirement savings out of your savings pot once every tax year while you are employed. Your savings pot is made up of your seeded starting balance, one-third of ongoing contributions plus investment return. There will be a transaction fee if you are in a Sygnia retirement annuity fund or preservation fund. Consider any withdrawals carefully, as they will leave you with less money when you retire. There are some rules for taking retirement savings out of your savings pot:
Here are some things to know:
Withdrawals will be taxed at your normal (marginal) tax rate.
SARS will levy penalty interest (IT88) on tax arrears from your savings pot withdrawals.
You may not cancel withdrawals to avoid this interest.
Withdrawals may be limited if you have:
Ongoing divorce or maintenance orders
A housing loan guarantee
Workplace misconduct issues.
Two-pot tax calculator
Before you make a savings withdrawal, use our tax calculator to see how much you can expect to receive after tax.
Have questions? You’re not alone.
Curious about how the new two-pot retirement system will affect your savings? We've put together a series of easy-to-understand videos to answer all your burning questions.
Head over to our YouTube channel for:
- Quick explainer videos starring Chef Reuben Riffel
- Webinars
- Detailed FAQs
- Expert insights
What should you do right now?
- Make sure we have your correct contact details.
- Keep an eye out for updates from your Fund Administrator.
- Think carefully before making withdrawals – remember, they will affect your future!
Frequently asked questions about the two-pot retirement system
What is the two-pot system?
When do the two-pot changes start?
How will my contributions be treated?
What happens to my existing savings?
Do my investments change when the two-pot system starts on 1 September 2024?
What happens to the two-thirds of contributions that go into my retirement pot after 1 September 2024?
Can I take money out of my savings pot while I am employed?
How does my savings pot build up in the fund?
I heard there is a starting amount in my savings pot when the two-pot system begins. How is it calculated and where does it come from?
How much can I take out of my savings pot?
Where will the starting amount in my savings pot come from?
If I take money out of the fund, will I have less retirement money?
How much money can I take out of the fund after 1 September 2024 while I am still employed?
Do I have to withdraw money out of the fund on 1 September 2024? What happens if I don’t?
How do I ask for money out of the fund?
Will I get my money immediately if I ask for it on 1 September?
What happens to my retirement savings if I leave my job?
How are savings withdrawals taxed?
Will I pay tax and fees if I take money out of my savings pot in the fund?
What happens if I owe SARS money when I take money out of my savings pot?
What is my marginal rate of tax?
Could I be taxed more when my tax assessment comes through at the end of the year?
What if I become a new member after 1 September 2024?
What if I am an unclaimed benefit member?
Can I opt out of the two-pot system?
How do I get money from my savings pot?
How do I submit a claim on EPIC?
How do I access the online member portal?
How do I submit a manual claim form?
What do I need to know about submitting a manual claim?
Where are your offices located for hand delivery?
What if I don't receive my OTP number when I try to access the portal?
What if I don't have a smartphone or computer but I need information?
How do I contact SURF?
Call: +2710 595 0574
Email: surf@srf.sygnia.co.za
USSD: *120*794642# (*120*SYGNIA#)
Ask your employer to facilitate a retirement benefits counselling session.
The counselling provided will not constitute financial advice, but it will help you better understand your options.
Educate yourself, consider your options and make the right choice.