A major change to SA's retirement system, known as the Two-Pot Retirement System, will take effect on March 1, 2024, affecting all retirement fund members.On 1 March 2024 there will be a radical change affecting everyone who is a member of a retirement fund. This is known as the Two-Pot Retirement System and applies to any member of an employer pension/provident fund, a retirement annuity, or a preservation fund.
To recap, from 1 March 2024 all retirement contributions, whether to an employer fund or a retirement annuity, will be split between a Savings Component and a Retirement Component.One-third of the member’s contributions will be paid into the Savings Component. The contributions, and all growth in the fund, would be accessible prior to retirement. Withdrawals may only be made once in a calendar tax year and only if the value of the Savings Component is at least R2 000 or more.
If she withdrew all her funds from her Savings Component before age 65, the withdrawals would be fully taxed at her marginal tax rate, and she would not have the R4.5 million in her Savings Component to provide a lump sum at retirement. Depending on the retirement fund, it may be possible for the funds in the Savings Component to be invested in different investment portfolios from the Retirement Component.
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