Understanding the two-pot system
On 1 September 2024, a new era in retirement savings begins. It is called the two-pot system. In terms of the new rules, you will be allowed to access some of your retirement savings, while you are still employed, in case of emergencies.
Need more info? Watch these quick videos that cover the basics of the two-pot system: English | isiXhosa | Setswana
Sanlam Corporate is dedicated to giving you support, information and access to helpful tools created to empower you with knowledge and confidence to make good financial decisions. This includes a team of dedicated retirement benefit counsellors available – for FREE – where your fund has elected to make use of this service.
What you should know
- How it works
Preserve your emergency savings
It's crucial to preserve your emergency savings to benefit from compound interest and reach your retirement goals.
Seek advice
In tough times, seek advice from a professional financial adviser.
Access savings as a last resort
Withdraw your emergency savings only as a last resort, and be aware of the tax implications.
Pointers to help you prepare
The new two-pot system divides your retirement savings into three pots. As a member of a retirement fund, you will be allowed to make one withdrawal per tax year from the emergency savings pot. You will only be able to access money saved in your retirement pot when you reach your retirement age.
Vested Pot
This pot is made up of all of your contributions, including interest and growth before 1 September 2024. You will still be allowed withdraw from this pot if you resign or are retrenched. No more contributions will be made to the vested pot after 1 September 2024.*
* No more contributions will be made to the vested pot after 1 September 2024 – except for members of provident funds and provident preservation funds who were 55 years or older on 1 March 2021.
Emergency Savings Pot
You can withdraw once per tax year (1 March to 28 February).
If you have less than R2,000 in your emergency savings pot, you can't make a withdrawal.
You will be taxed for each withdrawal at your marginal rate.
Retirement Pot
This pot is off bounds until you reach your retirement age.
You cannot access the retirement pot until you retire.
On 1 September 2024, your retirement pot will have no value. From this date, however, 2/3 of all your future contributions will be allocated to this pot.
What happens if I make a withdrawal from my emergency savings pot?
The withdrawal benefit will be taxed at your marginal tax rate, which will depend on your total taxable income in the tax year, including the withdrawal from the emergency savings pot. The income tax as well as any outstanding tax debt, will be deducted from the withdrawal benefit before it is paid to you.
How to apply for a withdrawal
Before you make a withdrawal, speak to a financial adviser about other options to access funds in an emergency. If a withdrawal from your savings component is your only option, follow these steps:
Check your eligibility
Ensure that you have a minimum balance of R2,000 in your savings component or that you have not already made a withdrawal in the tax year.
Consider the impact of tax on your withdrawal
Your withdrawal amount will be taxed at your marginal tax rate. If you owe SARS any tax, it will also be deducted from your withdrawal amount before it is paid out to you.
Complete the withdrawal request
Register on Sanlam Secure Services to obtain the withdrawal request form or contact Sanlam Client Care Services.
Submit your withdrawal request
Submit the completed form along with all required documentation for processing.
Sanlam requests a tax directive from SARS
Once you’ve submitted your withdrawal request form and SARS has issued a tax directive, you cannot cancel your request to withdraw.
Wait for processing
Sanlam will process your withdrawal request and pay the funds into your account.
For more detailed guidance or assistance, please reach out to your financial adviser or contact Sanlam directly.