The Vested Capital In The 2 – Pot Retirement System

Last week, we addressed the Savings Pot, the Retirement Pot and the Savings Pot Seed Capital. Now we want to focus on the Vested Capital. Note that changes to the retirement system will apply prospectively i.e. to future contributions from 1 March 2024 – if the new system is indeed implemented on this date.

The vested capital is the consolidation of existing pension funds, provident funds and retirement funds as at the end of February 2024. There will be no changes to the rules that apply to the vested capital. So if a pension or provident fund member resigns, they will be able to withdraw their funds in full as is the case under current legislation. Withdrawals will be taxed according to the Lumpsum withdrawal tax table as is the case at the moment. Similarly, the retirement annuity funds in the vested pot cannot be withdrawn until the member is 55 years old.


Sbo* has R200 000 pension on 28 February 2024. She contributes R1500p/m towards her pension so R500 will go into the Savings pot and R1000 into her Retirement pot. On 1 April, she can withdraw the full amount in her Savings pot = R20 500. This amount is going to be taxed according to her income tax rate.


This is for illustration purposes only. You can contact ThuthukaSA if you are thinking of resigning from your job or you are preparing to go on pension and you want further clarity and advice. Book your consultation here.

Resigning to cash your pension

We hope that these two newsletters have helped to shed some light to the 2-pot retirement system. Many people have been resigning from their jobs to cash their pensions, especially when they are under financial stress. Those who do this often find themselves without a monthly income and in some instances, they go back into debt. Another big surprise for many is the huge tax that they pay when they cash their pensions. So in the end when you cash your pension, you end up paying lots of money to SARS, you are left with very little to pay off your debts and even less money for your monthly living expenses.

If you are resigning from your job or going on retirement, contact ThuthukaSA to help you save on tax and to plan properly for this big step

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