What is the two-pot retirement system?

A reform that took effect on 1 September 2024 splitting all new retirement-fund contributions into two components: one-third into a savings pot you can access once a year, and two-thirds into a retirement pot that's locked until retirement age. Existing balances on 31 August 2024 stay under the old rules in a vested pot.

How much can I withdraw from my savings pot?

One withdrawal per tax year, with a minimum of R2,000 and no upper cap (other than the savings-pot balance). At launch, members could seed the savings pot with up to 10% of their vested-pot balance, capped at R30,000.

How is a savings-pot withdrawal taxed?

At your marginal income-tax rate — the same rate as a salary increase would be taxed at. SARS will issue a tax directive before the fund pays out, and the after-tax amount lands in your bank account. This is harsher than the old retirement lump-sum tables (which had a R550,000 tax-free portion).

Can I still withdraw my whole pension when I leave a job?

Only the vested pot (your balance on 31 August 2024 plus growth, under old rules) can still be withdrawn in cash on resignation. The retirement pot is locked until you actually retire, and the savings pot is only accessible via the once-a-year withdrawal rule.

Two-pot retirement system · invoicebook.co.za

The short version

Before 1 September 2024 you could empty your pension fund in cash whenever you changed jobs — and most people did. The two-pot system fixes that problem without taking away access entirely. New contributions split two-thirds into a retirement pot (locked until 55+) and one-third into a savings pot (one withdrawal a year). Everything you'd already accumulated by 31 August 2024 sits in a third pot, the vested pot, and stays under the old rules.

The three pots

From the start of September 2024, every retirement-fund member has up to three components in their fund:

Vested pot — your balance on 31 August 2024, plus all subsequent investment growth on that opening balance. Old rules apply: you can withdraw the cash portion when you leave the employer (subject to the retirement lump-sum tax tables, with the first R550,000 cumulatively tax-free).
Retirement pot — two-thirds of every new contribution since 1 September 2024. Inaccessible until you actually retire (typically age 55), at which point it must be used to buy an annuity.
Savings pot — one-third of every new contribution. You can make one withdrawal per tax year directly from this pot. The minimum withdrawal is R2,000.

The seeding amount

To give the savings pot something to draw on at launch, every member's savings pot was opened with a one-time seed transfer from the vested pot. The amount: 10% of the vested-pot balance on 31 August 2024, capped at R30,000. So a member with R150,000 in their fund had R15,000 seeded into the savings pot; a member with R1,000,000 had R30,000.

You don't have to take that R30,000. It just sits in the savings pot and grows; you can leave it there and it'll fold into your retirement annuity at retirement, or you can use one of your annual withdrawal slots to take it out.

Tax on a savings-pot withdrawal

This is where most people get a nasty surprise. A savings-pot withdrawal is taxed at your marginal income-tax rate, not at the retirement lump-sum tables. So if you earn R600,000 a year and you take R20,000 from your savings pot, that R20,000 is added to your income and taxed at 36% — about R7,200 deducted before payout. SARS issues a tax directive to the fund, and the fund pays you the net amount.

Compare that with the old rules on a vested-pot resignation withdrawal: the first R550,000 (cumulatively across your lifetime) was taxed at 0%, and only amounts above that hit the lump-sum tables. The savings pot is much less tax-friendly — but it's also not the only mechanism, and it doesn't burn through your retirement nest egg the way a full resignation withdrawal did.

What about resigning from your job?

When you leave an employer now, you have three balances and three sets of rules:

The vested pot can still be cashed out in full (taxed under the lump-sum tables) or transferred to a preservation fund.
The retirement pot stays in a fund — typically transferred to a preservation fund or a new employer's fund. You cannot access it as cash.
The savings pot moves with you, and your annual-withdrawal right resets per fund. You can take a savings-pot withdrawal whether or not you've left the employer.

What it means for retirement annuities

Retirement annuities (RAs) work the same way under the two-pot system: every contribution from 1 September 2024 splits two-thirds / one-third. A higher RA contribution still gives you the same R430,000 / 27.5% income-tax deduction — the deduction is on what goes in, regardless of which pot the rand lands in. What changed is what you can do with it later.

Practical takeaway

The savings pot is best used as an emergency-fund top-up, not a regular income source. Every withdrawal is taxed at your marginal rate and shrinks your retirement balance. The retirement pot and vested pot are doing the long-term compounding work, and the discipline of locking up two-thirds of new contributions is the whole point of the reform — for most members, leaving the savings pot untouched produces a materially bigger pension at 65.