ThuthukaSA

With The 2 – Pot Retirement System, No Need To Resign To Cash Your Pension

It is expected that from 1 March 2024, you can access your pension money without resigning from your job.

If you were thinking of resigning because you are under financial pressure and you want to have access to your pension, you are better off not doing so –unless you have found another job.

Key things you need to know about the 2-pot retirement system:

  1. The Savings pot: The first pot is called the Savings Pot. From 1 March 2024, one third of your monthly contribution towards your pension will be allocated to your Savings pot and two thirds of your contribution will be allocated to your Retirement pot. Withdrawals can only be made from the Savings pot.
  2. The Retirement pot:The  second pot is called the Retirement pot. Two thirds of your monthly contribution towards your pension will be allocated to your Retirement pot. No withdrawals will be allowed from the Retirement pot until retirement age. This is very different to the current practice where you can resign from your job to have access to your pension at any age. If you contribute R1500 monthly towards your pension, R500 will go towards your Savings pot and R1000 to your Retirement pot.
  3. The Savings Pot Seed Capital: The savings pot seed capital is the initial balance that will be in a person’s Saving pot on 1 March 2024. This seed is made up of the funds in your pension fund. You can withdraw 10% of this amount, up to a maximum of R25 000. One withdrawal will be allowed a year and the minimum withdrawal will be R2000. There could be changes to the maximum amount that you can withdraw.

Example:

If your pension fund value is R300 000 on 28 February 2024, 10% or R30 000 will be transferred to your Savings pot on 1 March 2024. However, you can only withdraw a maximum of R25 000 from your Savings pot and this will be taxed.

Next time, we will talk about the vested capital and how your withdrawal from the Savings pot will be taxed. If you do not have a tax free savings account, please enquire about it and we will help you open one.

If you are resigning from your job or going on retirement, contact ThuthukaSA to help you with your retirement planning.

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