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Expert urges South Africans to seek advice on two-pot withdrawals

todaySeptember 2, 2024 174 1

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As South Africa’s new two-pot retirement system has officially been rolled out, financial advisor from Inkunzi Wealth Group, Thobile Ndlovu, has advised South Africans to consider getting advice before withdrawing.

The new system, which came into effect on Sunday, will divide retirement savings into a “savings pot” and a “retirement pot”.

It is designed to ensure that South Africans can access some of their retirement savings in an emergency while allowing most funds to grow for retirement.

Two-thirds of funds will go to the retirement pot, while one-third (33.33%) goes to the savings pot, where fund members can make one withdrawal per year capped at R30 000.

This portion would be accessible to members before they reach retirement age, without having to quit their jobs.

Speaking to YNews, Ndlovu says people must know all the nitty-gritties of the system before making withdrawals during rainy days.

Ndlovu says there have been a lot of calls around this system, pointing out that it shows how much in need of money people are.

There is a catch, though. Withdrawals will be taxed.

South African Revenue Service (SARS) Commissioner, Edward Kieswetter, has also warned that on top of the tax and admin fees that will be deducted, SARS will also take its money from those who owe the revenue service before their savings are paid out.

The African Transformation Movement (ATM) wants the system reviewed and the cap for withdrawals increased.

The party says the current limit is insufficient to alleviate workers’ financial burdens.

Instead, party spokesperson Zama Ntshona says, it could exacerbate their dire situations.

 

South Africans have mixed views on the system.

I think Two pot system was designed for government employees. Not for private sector companies or employees.
Reason being government people earn a lot of money with bonus, health, housing and other benefits, subsidiaries, and compensation.
They hardly get retrenched, fired, or… pic.twitter.com/WVMDkRNWUU

— DJ KYOS (@deejaykyos) September 2, 2024

Depends – is this from the two-pot system, or just ordinary savings? Generally, and very broadly, credit card interest rates are brutal, and there’s very few things that would be more advantageous than to get rid of it. Unless said money could be growing taxfree for decades.

— Zatreuk (@zatreuk) September 2, 2024

@ZungulaVuyo, I noticed that U made a plausible argument regarding the so-called #TwoPotSystem. Can U kindly find out why @sarstax uses personal tax table rates and not retirement tax rates to calculate tax on the R30k which is sourced from pension savings?

— DADDYD (@Mademza_) September 2, 2024

The two pot retirement system has been created to distract workers from the financial distress they are experiencing due to limited COLA increases in the last few years. If COLA and benefits were still dispersed as before it would not be necessary especially in public service. https://t.co/HKURKktvRK

— Swazi Labour Insight (@LabourSD) September 2, 2024

Fellow Azanians, the two pot retirement system is a poor attempt to avoid addressing the elephant in the room: cost of living.
Why are ppl in such financial distress?. It is the cost of living.

— Comrade Themba Godi (@ThembaGodi_) September 2, 2024

Looking at everyone giving advice about the two pot system and be like; oksalayo siya drawer pic.twitter.com/YClnJD40nZ

— Given Chepape (@PhekgoGiven) September 2, 2024

Two Pot System pic.twitter.com/cVJPsJihY5

— H….𝕏 (@M_H_rv_y) September 2, 2024

Everyone in the office is complaining!
Kuthiwa the system is experiencing some difficulties and people want their two pot 😭😭

— Ndi’ready 2.0 (@PortiiaS) September 2, 2024

Written by: Nonhlanhla Harris

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