The two pot retirement system will make it possible for you to make a withdrawal from the savings pot of your retirement fund. Before you do so, be sure you really need to make the withdrawal because you have no other alternatives and consider the impact on your future retirement savings. Read more: Should I withdraw from my retirement fund under the two-pot system?
If after considering your options you want to go ahead and withdraw money from your savings pot, these are the steps you will need to take:
Check if your retirement fund is included in the two-pot system. Your retirement fund may not be part of the two-pot system if:
Check that your retirement fund has the right contact details for you and that you are receiving statements from your fund. You need to check that your fund has your correct cell phone number, email address and physical address for you.
Your fund should have sent you some communication with its contact details, or you can ask your employer’s human resources (HR) department or check if the administrator of your umbrella fund has set up a webpage for your fund.
Your fund or its administrator may have set up a digital platform for members. If so, you should sign up to this platform to check your details and to make an application for a withdrawal.
Be sure when you do so that you are on the correct platform provided by your fund or your employer’s HR department.
Make sure your retirement fund has the right identity document details – for example, if you have married and changed your name – be sure your administrator has the correct name and identity number for you.
If your fund has a different spelling of your name on its system to that in your identity document, your application will be rejected to avoid fraud.
Make sure your retirement fund has up-to-date banking details for you and that your bank account is in the same name as your identity document and the name the fund has for you.
Your fund will verify these details before making any payment to you and, if the details you submit in your withdrawal application do not match those the fund has on record for you, your fund will reject your application, and you will not get paid out. Funds are being very careful to prevent fraudulent withdrawals.
In order to withdraw from your savings pot you will need a tax number – even if you are not paying tax because you earn below the tax threshold.
If your fund does not have your tax number, you will need to provide the administrator with proof of your tax number.
If you are employed, your employer should have registered you for tax regardless of how much you earn. Look on your payslip or IRP5 for the number.
If you are not sure if you have a tax number or you have forgotten the number, you can get it from the South African Revenue Service (SARS) using your identity number on:
If you do not have a tax number, you will need to register for tax by using the SARS eFiling website, the SARS MobiApp or by visiting a SARS branch – there is more info on this page on the SARS website.
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If you are preparing to make a withdrawal soon after 1 September 2024, check your fund credit to ensure you have a fund credit or balance of at least R20 000. If you do not, it means your savings pot will be seeded with an amount of less than R2 000 – the minimum withdrawal amount.
If it is after 1 September 2024 and you have a recent statement from your fund, check the balance in your savings pot is more than R2 000.
Check if you have made a withdrawal in the past tax year (since March 1) – if you have, you will not be able to withdraw until the next tax year.
Before you apply for a withdrawal, make sure that your tax returns are up to date and any tax you owe has been paid to SARS.
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f you have not filed the necessary tax returns, SARS will reject your fund's request for a tax directive.
SARS can also assess your tax based on the information it has from employers, financial institutions and third parties. If you have been assessed and SARS has decided you owe penalties and tax for failing to file tax returns, it is likely to deduct these amounts from any withdrawal from your retirement fund’s savings pot.
To check if you need to file a return or if you owe SARS money, check your SARS statement of account. You can do this using any one of these methods:
File your outstanding returns to stop penalties accumulating and make arrangements with SARS to repay your outstanding taxes. If you have an arrangement in place to pay a certain amount each month, then SARS has stated that it will not take the outstanding tax from your retirement fund withdrawal. Read more: Why should I not ignore my tax debt?
If you do not have a payment arrangement or you default on that arrangement, SARS can instruct your retirement fund administrator to deduct what you owe from the withdrawal you make.
Ask your retirement fund how you can apply for a withdrawal or look out for a communication from your fund as to the process you should follow. Most administrators will be encouraging members to use their digital platforms to make their withdrawals.
If you are employed, you can ask your HR department to advise you on the process.
Your fund, or your employer’s HR department, will direct you to the correct online process or form you need to complete.
Be sure when you complete the process or form to use the bank details that match those the fund has for you or update your bank details with the fund.
Before you can be paid, your fund has to apply for a tax directive from SARS and deduct the necessary tax. Read more: How much tax will I pay on withdrawals from my savings pot before retirement?
If you want to check how much tax will be deducted before you apply for a tax directive, use this calculator provided by SARS. Do this before you apply for a withdrawal as once a tax directive is requested, you cannot cancel it and the withdrawal and tax payment will go ahead.
In order to apply for a tax directive from SARS, your fund’s administrator will ask you to provide certain details. You need to supply the correct information to get the directive.
The fund will ask for your tax number and for your taxable income for the year.
SARS's website says saving pot withdrawals will be taxed based on your annual income and bonus income plus the withdrawal amount. It will not take into account deductions, exemptions or tax-free amounts, it says.
Remember that at the end of the tax year, your tax will be assessed on the sum of:
This sum can be reduced by:
If you under declare your income when you take the withdrawal, it is likely that you will have to pay in when your tax is assessed at the end of the tax year.
Your retirement fund may charge you a transaction fee for making a withdrawal from your fund.
This may be either a fixed rand amount or a percentage of the amount you withdraw. Check with your fund or administrator what this charge will be and make sure you are comfortable having this fee deducted from your withdrawal.
 BE PATIENTAny issues verifying your identity or bank details could delay your withdrawal. Even if all your details are correct, it could take days for your fund to obtain a tax directive and for the claim to be paid out, especially if your claim is one of many a fund receives soon after 1 September 2024. |
Only when you are comfortable with the amount you get after tax and charges should you submit your application for a withdrawal. Remember, once a tax directive is issued, it cannot be reversed.
Ask your fund if it has a facility that will allow you to track your claim.
If you have a complaint regarding getting information about your fund or the way your withdrawal application is dealt with, first lodge a complaint with your fund.
Only if you do not get a satisfactory response from the fund, take your complaint to the Pension Funds Adjudicator.
If your complaint is about the tax deducted from your withdrawal, you retirement fund – and the administrator that acts on its behalf - cannot help you – you need to complain to SARS. If SARS does not assist you, you can approach the Tax Ombud. Read more: Where to complain
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