- How it works
- Savings structure
- Withdrawals
- FAQs
How two-pot retirement works
One-third of your contributions go into a savings component, which you can withdraw from once per tax year if you need to. Two-thirds go into a retirement component, which stays invested until you retire and must be used to buy a retirement income. Everything you saved before 1 September 2024 sits in a vested component, where the previous rules still apply.
On 1 September 2024, a one-off amount — 10% of the vested component's value, up to R30,000 — was transferred to the savings component as an opening balance. Together, these components make up the total retirement savings in your plan.
How retirement savings are structured
Your retirement savings is made up of 3 components, making up the total retirement savings in your plan.
Your savings before the change
Everything you saved up to 31 August 2024.
- Keeps the previous rules
- Gave a one-off boost of 10% (up to R30,000) to your savings pot when the system started
Your money when you need it
One-third of every contribution since 1 September 2024.
- Available once per tax year
- Taxed at your marginal rate when you withdraw
Your income after you retire
Two-thirds of every contribution since 1 September 2024.
- Stays invested until you retire
- Must be used to buy a retirement income (an annuity)
Withdrawals
Withdrawing from a savings component
You should only withdraw from your savings component in a financial emergency. Speak to a financial adviser first. If a withdrawal is still your only option, follow these steps.
How to apply for a withdrawal
- Check your eligibilityLog in to Sanlam Online, or register first if you haven't, to view the components of your retirement plan. You need at least R2,500 in your savings component, and you can't have made a withdrawal in the current tax year (1 March to end February).
- Get the savings withdrawal request formDownload it from Sanlam Online, email a request to life@sanlam.co.za, or send a WhatsApp message to 0860 726 526 and select option 9.
- Submit your completed formSend it to life@sanlam.co.za or submit it via Sanlam Online, along with your income tax reference number, annual income, residential address, a copy of your ID, and a bank statement not older than 3 months.
- We request a tax directive from SARSThis confirms the tax on your withdrawal, which is taxed at your marginal rate, and any tax you owe SARS is also deducted. From this point, you can't cancel your withdrawal.
- Receive your paymentWe'll send you a confirmation letter once your request is finalised and the money has been paid into your bank account.
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FAQs
Two-pot retirement system FAQs
Can I withdraw money from my savings component?
Yes. You can make one withdrawal from the savings component of a retirement savings plan per tax year, provided the legal requirements and our conditions at the time are met. The tax year runs from 1 March to the end of February. The minimum withdrawal amount is R2,000 and you need a balance of at least R2,500 in your savings component before you can withdraw.
If you have more than one plan, you can make a withdrawal from each plan at different times during the tax year.
Remember that any amount you withdraw, plus the growth it would have earned, won't be there when you retire. Before you withdraw, consider speaking to a financial adviser about other options.How will a withdrawal from the savings component be taxed?
Every withdrawal from your savings component is added to your taxable income for the year and taxed at your marginal tax rate, which is the rate that applies to the top portion of your income. There's no tax-free portion for savings component withdrawals.
For example, if your marginal tax rate is 26% and you withdraw R10,000; R2,600 goes to tax and you receive R7,400. If you owe the South African Revenue Service (SARS) any outstanding tax, it will also be deducted before the money is paid to you.
The withdrawal is included in your tax assessment for that tax year, so you may pay further tax, or get some back, when your return is assessed. You can estimate the tax on a withdrawal with the two-pot calculator on the SARS website.Can I change how my contributions are split between the pots?
No. The split is set by law: one-third of every contribution goes to your savings component, and two-thirds go to your retirement component. For example, if you contribute R3,000 a month, R1,000 goes to your savings component and R2,000 goes to your retirement component.Does my age matter?
It might. If you were a provident fund or provident preservation fund member aged 55 or older on 1 March 2021, you weren't automatically included in the two-pot retirement system.
Members in this group could opt in between 1 September 2024 and 31 August 2025. That window has now closed. If you opted in, the two-pot rules apply to your plan and can't be reversed. If you didn't, your plan continues under the previous rules and isn't affected by the two-pot system. If you're not sure which applies to you, check your benefit statement by logging on to Sanlam Online or speak to your financial adviser.Do withdrawals from the savings component affect the R550,000 lump sum that’s tax-free at retirement?
No. Withdrawals from your savings component before retirement are taxed at your marginal income tax rate, so they don't count towards the R550,000 that's currently tax-free when you take a lump sum at retirement.
The R550,000 is a once-in-a-lifetime amount, and it can be reduced by other lump sums, for example, if you cash out your vested component when you resign. Savings component withdrawals under the two-pot system are taxed separately and leave it untouched.