ver the last few years, the National Treasury has been working on introducing the two-pot retirement system. Recent updates to the draft legislation are open for public comment. They also provide further clarity on how the system will work and what it means for your retirement funds.
If you have multiple retirement funds – for example, you are contributing to a company retirement fund and a personal retirement annuity – you can make an annual withdrawal from each of these funds.The funds that have accumulated in your retirement fund until February 29 2024 will be in a separate “vested pot”. The same rules that currently apply to the retirement funds will apply to the vested pot.
For example, a member with a fund balance of R100 000 on February 29 2024 would be allowed to transfer R10 000 to the savings pot which would then be available for withdrawal.Will my withdrawals from the savings pot be taxed? All defined benefit funds, which include the Government Employees’ Pension Fund , will be included in the new regime. However, the GEPF is still to provide input regarding the Treasury’s proposal.
These are retirement annuities which are sold by life insurance companies with additional features, such as universal life policies with life or lump sum disability cover. If you are a member of a retirement annuity provided by a life insurance company, it is best to check with your financial adviser whether your fund qualifies for the two-pot system.
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