Two-pot pensions: Treasury clears up tax poser | Business

The new two-pot system means South Africans will be able to cash out one-third of their future retirement savings throughout their career, while two-thirds will only become accessible on retirement. The one-third component is called the"savings pot", while the other two-thirds is the"retirement pot".

On Wednesday, Treasury confirmed that withdrawals from the savings pot upon retirement will also still be subject to lump sum rates – and won't be taxed at the much higher normal income rates that will apply to early withdrawals. But if you wait until retirement before taking a lump sum - on an amount of R2 million, you will pay an effective tax rate of only 22.4% - regardless of any other taxable income earned in the same year.

The savings in your retirement pot that are not paid out as a lump sum on retirement, will be received as a monthly annuity and taxed as individual income.

Malaysia Malaysia Latest News, Malaysia Malaysia Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

No more 'first come, first served' as Eskom issues new rules for grid access | BusinessEskom has issued interim rules to help it deal with grid access constraints, particularly only making allocations to projects that can demonstrate they are shovel-ready.
Source: News24 - 🏆 4. / 80 Read more »

Gaps loom in key roles as banks, insurers neglect succession planning, warns Prudential Authority | BusinessSome South African financial institutions are not prioritising succession planning for critical roles, leaving banks and insurance companies overly dependent on current personnel, according to an industry regulator. | News24_Business
Source: News24 - 🏆 4. / 80 Read more »