Deepening Democracy through Access to Information
Home / Legal Briefs / Other Briefs RSS ← Back

Email this article

separate emails by commas, maximum limit of 4 addresses

Sponsored by


Article Enquiry

Five Things to Know Before You Withdraw Your Savings Under the New Two-Pot System


Embed Video

Five Things to Know Before You Withdraw Your Savings Under the New Two-Pot System

Tax Consulting SA

7th June 2024


Font size: -+

While experts continue to debate the merits of the two-pot system it has been almost a week since it has been signed into law. The reality is that as from 1 September 2024 many South Africans will start withdrawing from their savings pot under the new system.

In this article we provide 5 key considerations that fund members must be aware of before making a withdrawal.


1.      Seed Capital and Withdrawal Limits

On 31 August 2024, 10% of the value of your existing retirement fund, or R30 000, whichever is lower, will be allocated to your savings pot. This initial allocation of funds has been termed seeding capital. The seeding capital allocation is a once-off transfer at the commencement of the two-pot system and will not be repeated in the following years.


The savings pot will be accessible at any time to a fund member with only one withdrawal permitted in a tax year. There is no maximum withdrawal amount set for fund members looking to withdraw from their savings pot but must be a minimum of R2 000.

2.      SARS Has the First Right to Your Savings Pot Withdrawals

Fund members need to be aware that before any payment will be released, the fund administrator will need to apply to SARS for a tax directive. Where the taxpayer has an outstanding tax debt with SARS, the fund administrator will be issued with a notice to pay this debt from the withdrawal amount first and only pay the taxpayer the balance.  

3.      Annual Withdrawals are NOT Limited to a Single Policy Per Tax Year

Another dimension of the savings pot is that a fund member is permitted to make one annual withdrawal per policy. This incentivises the concept of having a more diverse policy portfolio. 

An example of this scenario is where an individual is contributing to three policies, the fund member would be eligible to make an annual withdrawal from each respective policy. Needless to say, a fund member will be limited to the actual amount that is held within their savings pot at the time of withdrawal. 

4.      Tax On Savings

A withdrawal from a fund member's savings pot will be subject to tax at the fund member’s marginal tax rate. This means that any withdrawal will be taxed in the same manner as a salary or other similar income. 

The tax on the withdrawals will be withheld by the respective fund administrator and paid directly over to SARS.

5.      No Resignation Required

Fund members must be aware that the new system has limited their right to withdraw from their 2/3 retirement pot. Previously fund members were permitted to access their total lump sum amount under their retirement policy upon a resignation. The new two-pot system thus implements a lock-in of the retirement pot until a fund member reaches retirement.

The Takeaway for Fund Members

We can expect to see fund administrators send out communications to their members on how savings withdrawal claims will be processed going forward.

We urge fund members to consider the practical implications relating to their withdrawals from their savings pot, most importantly the tax implications. An impulsive withdrawal without understanding the implications could lead to far more harm than the relief afforded by accessing those funds.

For more information on the two-pot system we have included the below QR Code to the National Treasury’s information portal – 

Written by John Paul Fraser, Tax Attorney at Tax Consulting SA


To subscribe email or click here
To advertise email or click here

Comment Guidelines

About is a product of Creamer Media.

Other Creamer Media Products include:
Engineering News
Mining Weekly
Research Channel Africa

Read more


We offer a variety of subscriptions to our Magazine, Website, PDF Reports and our photo library.

Subscriptions are available via the Creamer Media Store.

View store


Advertising on is an effective way to build and consolidate a company's profile among clients and prospective clients. Email

View options
Free daily email newsletter Register Now