For South Africans with a pension, provident, preservation or retirement annuity fund who want to know what the two-pot system means for their money, and whether to touch their savings pot.
In short: Since 1 September 2024, one-third of new retirement contributions goes into a savings component you can withdraw from before retirement, and two-thirds goes into a retirement component that stays locked until you retire. Money you had saved by 31 August 2024 sits in a vested component under the old rules. You can make one savings withdrawal per tax year, of at least R2 000, through your fund. It is taxed at your marginal rate, and SARS takes any tax debt you owe first. Treasury advises using it sparingly. This is general information, not tax or financial advice.
The three components
National Treasury’s two-pot FAQ describes three parts:
| Component | What goes in | When you can get it |
|---|---|---|
| Savings component | One-third of contributions from 1 September 2024, plus the once-off seed capital | Once per tax year before retirement (minimum R2 000), or as cash at retirement |
| Retirement component | Two-thirds of contributions from 1 September 2024 | Only at retirement. It cannot be taken when you resign |
| Vested component | Everything you had built up by 31 August 2024, plus fund growth | Old rules apply: on resignation you can take it as cash (taxed) or transfer it |
As an example, Treasury says a member contributing R900 a month from September 2024 puts R300 into the savings component and R600 into the retirement component, so about R3 600 builds up in the savings component over 12 months. All three components keep earning fund returns.
Who the system covers
It applies to active members of private and public sector retirement funds. Treasury excludes old-generation or legacy retirement annuity policies, funds with no active members (such as funds in liquidation, closed or dormant funds), pensioners, and provident fund members who were 55 or older on 1 March 2021 and did not opt in. Those older provident fund members can choose to join, but Treasury says the choice cannot be reversed. If you are not sure which rules apply to you, ask your fund.
Seed capital is once-off, not an annual cap
When the system started, 10% of your fund value on 31 August 2024, or R30 000, whichever was lower, moved from the vested component into the savings component as seed capital. Treasury is clear that this was a once-off transfer. It is not the most you may withdraw each year, and it does not repeat.
Treasury’s worked examples: a R200 000 fund value seeded R20 000. A R750 000 fund value seeded R30 000, because 10% (R75 000) is above the cap.
Savings withdrawal rules at a glance
- Once per tax year. The tax year runs from 1 March to the end of February. If you have more than one contract in the same fund, the Income Tax Act allows one withdrawal per contract per tax year. See when you can claim again after 1 March for the timing.
- Minimum R2 000 per withdrawal, before charges. There is no maximum other than what is in your savings component.
- You do not have to withdraw. Money you leave stays invested and can be taken in a later year, or at retirement.
- Leaving the fund. Under the latest amendments to the Income Tax Act, if your membership of the fund ends, you may be allowed to withdraw the full savings balance, even if it is under R2 000 and even if you already withdrew that tax year. Ask your fund how it applies this.
- Your fund may charge an admin fee per withdrawal. Ask what it is before you apply. Our guide to checking and lowering pension fund fees explains what else to ask your fund.
How to make a savings withdrawal
Treasury says you apply to your own retirement fund, not to SARS or a third party. The usual steps are:
- Check that you are registered for tax. SARS says it will not issue a tax directive without a valid tax reference number. You can check or register on the SARS Online Query System, the SARS MobiApp, eFiling or the SARS WhatsApp line on 0800 11 7277.
- Submit any outstanding tax returns. SARS will not issue a directive if you have returns outstanding.
- Check whether you owe SARS. Any tax debt is deducted from your payout first, unless you have a formal payment arrangement. A garnishee order on your salary does not count as one.
- Use the SARS two-pot calculator for an illustrative estimate of what you will receive.
- Apply through your fund or employer’s HR or benefits team. The fund asks SARS for a tax directive and pays you the amount after tax and any debt.
Once your fund sends the directive application to SARS, SARS says the withdrawal is final and cannot be cancelled. Funds do not all pay at the same speed, so ask your fund for its timing. For more on directives and rejections, see our guide to navigating two-pot withdrawals without hurting your retirement.
How a two-pot withdrawal is taxed
A savings withdrawal is added to your taxable income and taxed at your marginal rate, the same as extra salary. It does not get the retirement lump sum tax tables. For the 2027 tax year (1 March 2026 to 28 February 2027), the SARS individual tax table runs from 18% to 45%:
| Taxable income for the year | Marginal rate |
|---|---|
| Up to R245 100 | 18% |
| R245 101 to R383 100 | 26% |
| R383 101 to R530 200 | 31% |
| R530 201 to R695 800 | 36% |
| R695 801 to R887 000 | 39% |
| R887 001 to R1 878 600 | 41% |
| R1 878 601 and above | 45% |
Example: if you earn R300 000 a year and withdraw R20 000, your taxable income becomes R320 000, which is still in the 26% bracket. About R5 200 would go to tax, leaving roughly R14 800 before any fund fee or SARS debt. This is an illustration only. The tax withheld through the directive is settled against your actual income when SARS assesses your return, so the final figure can differ. Our guide to how much tax SARS deducts from a two-pot withdrawal has more worked examples.
What happens when you change jobs, retire or divorce
- Resigning: the retirement component stays preserved and moves with you to a new fund or a preservation fund. The vested component still follows the old rules, so you can take it as cash (taxed) or transfer it. The savings component stays available under the savings withdrawal rules.
- Retiring: Treasury says you can take the savings component as a cash lump sum at retirement, and that waiting until then usually means less tax than withdrawing early. The retirement component is there to provide your income in retirement.
- Divorce: Treasury says divorce orders apply across all your components proportionally. Tell your fund as soon as divorce proceedings start.
Should you withdraw?
Treasury describes the savings component as help for times of real financial difficulty and advises using it sparingly. Before you apply, weigh up three costs:
- Tax now. Part of the withdrawal goes to SARS at your marginal rate, and more if you owe SARS money.
- Lost growth. Money taken out stops growing. As an illustration only, R20 000 left invested for 20 years at an assumed 8% a year after fees would grow to about R93 000.
- Smaller retirement income. Every rand withdrawn now is a rand that is not there when you stop working.
A withdrawal can make sense if the alternative is something worse, such as high-interest debt you cannot otherwise repay or losing your home. It rarely makes sense for spending you could plan for. The best protection is a separate cash buffer, so read our guide to building an emergency fund and aim to keep three to six months of expenses outside your retirement savings.
Watch out for two-pot scams
You do not need an agent to withdraw: you apply through your own fund. Do not pay anyone a fee to “unlock” your savings pot, and never share your PINs or one-time passwords. Treasury’s advice is simple: do not let anyone pressure you into a withdrawal that is not in your interest, and contact your fund if you need help.
Frequently asked questions
1 September 2024. Contributions from that date are split between the savings component (one-third) and the retirement component (two-thirds).
Once per tax year, which runs from 1 March to the end of February, with a minimum of R2 000 per withdrawal. If you have more than one contract in the same fund, one withdrawal per contract is allowed.
No. Treasury says the 10% or R30 000 seed was a once-off transfer into the savings component, not an annual withdrawal limit.
It is taxed at your marginal rate, which ranges from 18% to 45% in the 2027 tax year, and SARS deducts any tax debt first. Use the SARS two-pot calculator for an estimate.
No. The retirement component must be preserved until retirement. The vested component still follows the old rules, so it can be taken as cash (taxed) or transferred.
Yes. SARS will not issue a tax directive without a valid tax reference number, and it will not issue one if you have outstanding returns.
No. SARS says that once your fund sends the directive application, the withdrawal is final.
Sources
- National Treasury, Two-pot Retirement System updated FAQ (PDF), components, seed capital, resignation, divorce and exclusions.
- SARS, Two-Pot Retirement System, tax registration, outstanding returns, SARS debt and cancellations.
- SARS, tax directives and tax implications of the two-pot system.
- SARS, rates of tax for individuals, 2027 tax year.
- SARS two-pot calculator.
- Taxation Laws Amendment Bill, 2025 (PDF), savings withdrawal rules when fund membership ends.
Last checked: 3 November 2026 against National Treasury and SARS. Fund rules, fees and processing times differ, so confirm the details with your own fund before you apply. This is general information, not tax or financial advice.