Resigning from a job does not necessarily mean that all of your retirement savings are available to take in cash. Since the Two-Pot system started on 1 September 2024, different components can have different access rules.
Your first decision is not “which investment?”
Your first decision is what should happen to each part of your retirement benefit. Before completing any exit form, ask your fund administrator for a benefit statement showing the amounts in each component and the options available under the fund rules.
What may happen to each component?
| Component | General position when resigning |
|---|---|
| Vested component | Access depends on the rights preserved from the pre-Two-Pot system and the rules of your fund. A withdrawal may trigger lump-sum withdrawal tax. |
| Savings component | Subject to the statutory and fund rules, savings-component withdrawals are generally available before retirement. SARS taxes these withdrawals at the member’s marginal income-tax rate. |
| Retirement component | Generally cannot be cashed out on resignation and must remain preserved or be transferred to another approved retirement fund. |
What are the practical options?
- Transfer qualifying retirement money to your new employer’s fund.
- Transfer qualifying money to a preservation fund or another approved retirement structure, where permitted.
- Leave benefits in the existing fund if the fund allows paid-up membership.
- Take amounts that are legally accessible in cash after understanding the tax and long-term effect.
Why taking cash can be expensive
For ordinary retirement-fund withdrawal benefits, SARS uses a special withdrawal table. For the 2027 tax year the first R27,500 of cumulative taxable withdrawal benefits is taxed at 0%, after which the withdrawal table moves through 18%, 27% and 36% bands. Importantly, SARS applies retirement lump-sum taxation cumulatively, so previous qualifying lump sums can affect the tax on a new withdrawal.
Estimate ordinary withdrawal tax
What to get before deciding
- Your latest retirement-fund benefit statement.
- A breakdown of vested, savings and retirement components.
- The fund’s resignation/withdrawal options form.
- Confirmation of any previous taxable retirement-fund lump sums.
- A comparison of the tax, access and long-term retirement effect of each route.
SARS — Retirement Lump Sum Benefits
SARS — Two-Pot tax implications
South African Government — Two-Pot retirement system
Frequently asked questions
Can I cash out my full pension when I resign?
Not necessarily. Under the Two-Pot system, the retirement component is generally preserved until retirement and cannot simply be cashed out because you resign. Your vested and savings components can have different rules.
Can I transfer my retirement fund to my new employer?
Often a transfer to another approved retirement fund may be possible, subject to the rules of the funds and applicable legislation. Compare the new fund and other preservation options before deciding.
Is pension withdrawal tax based only on this withdrawal?
No. SARS applies retirement lump-sum tax on a cumulative basis, so certain previous lump sums can affect the tax payable now.
Should I preserve my pension after resigning?
Preservation can protect retirement capital and defer tax, but the best route depends on your circumstances, fund rules, costs, investment choices, liquidity needs and long-term plan.
Want help with your actual retirement-fund decision?
Request a no-obligation review before you submit a final withdrawal, transfer or retirement instruction.
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