The two-pot retirement system will take effect from September 1, 2024, and will allow South Africans to draw a maximum of R30,000 from their savings yearly before they retire.
The South African Revenue Service (Sars) hosted a webinar on Thursday on the system to educate taxpayers about the implementation of this retirement reform, its savings-withdrawal benefit, and implications for taxpayers’ retirement.
Mark Kingon, head of legal products at Sars explained that withdrawing monies from the savings pot of your retirement is a complex process.
Kingon noted that all South Africans should save for their retirement and cautioned using the two-pot system without thinking about the long-term ramifications.
You will pay tax on your savings withdrawal
Pat Ndaba, a lead engineer for the tax directive project under personal income tax at Sars said in the webinar that there are a number of tax implications and requirements by Sars when you withdraw from your saying through the two-pot system.
Sars requires that you must be registered for income tax, and your tax affairs must be in order, meaning your returns must be up to date
Ndaba said that there must be no debt owing that is due to Sars and you may use the “Lumpsum tax calculator” on eFiling to check the tax amount that could be deducted from your savings benefit
She explained that there will be a fund admin fee, that is determined by the fund, when you decide to withdraw from the savings, Sars does not control or collect them.
Ndaba said that if there is an existing debt due on the taxpayer's account, the savings withdrawal can be used to settle this debt before any payment is made to you by the fund administrator.
She noted that Sars has created a tax calculator for the two-pot system and this “Lumpsum Tax Calculator” can be used to calculate the tax on all lump sums including the savings withdrawal benefit.
In the near future Ndaba said that Sars is creating a tax calculator called the “two-pot tax calculator”.
“This calculator will be specifically used for the savings withdrawal benefit.
“When selecting this function, the system will return the possible tax amount and any outstanding returns and or any existing debt that is due to Sars,” she noted.
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