The Two-Pot system started on 1 September 2024 and created new retirement-fund components. When you leave employment, it is crucial to identify which component each rand belongs to.
The three components in plain English
| Component | What it represents | General access position |
|---|---|---|
| Vested component | Historic rights/savings built before the Two-Pot transition, subject to the applicable fund rules and vested rights. | Can have different access rules from the new retirement component. |
| Savings component | Generally one-third of new qualifying retirement contributions after implementation, plus the original seed allocation. | Pre-retirement withdrawals are allowed subject to the rules; SARS taxes savings withdrawals at marginal income-tax rates. |
| Retirement component | Generally two-thirds of new qualifying retirement contributions after implementation. | Must generally remain preserved until retirement and cannot simply be cashed out on resignation, dismissal, withdrawal or retrenchment. |
What happens when I resign?
Your fund must apply the law and its rules to each component. Do not assume your entire account balance is a “withdrawal benefit”. Ask for the exact component breakdown before choosing a route.
What happens when I change jobs?
The retirement component can generally be transferred to another approved retirement fund. The treatment of vested and savings components depends on the rules and instructions chosen.
Why the tax calculator excludes savings withdrawals
Because SARS taxes savings-component withdrawals at the member’s marginal income-tax rate, a correct estimate depends on broader taxable-income information and the SARS directive process. Treating it as a simple retirement-lump-sum withdrawal would be misleading.
SARS — Retirement Lump Sum Benefits
SARS — Two-Pot tax implications
South African Government — Two-Pot retirement system
Frequently asked questions
Can I withdraw my retirement component when I resign?
Generally no. SARS states that the retirement component cannot be taken as a lump sum when membership ends before retirement due to resignation, dismissal, withdrawal or retrenchment and must be transferred to another fund.
How often can I withdraw from the savings component?
The Two-Pot framework allows a savings-component withdrawal subject to the applicable statutory minimum and limits per tax year and fund/contract rules. Confirm the current rules with your fund and SARS.
How is a savings-component withdrawal taxed?
SARS states that savings-component withdrawals are added to taxable income and taxed at the member’s marginal income-tax rate.
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