Two-Pot Retirement System South Africa
Effective 1 September 2023, your retirement fund is split into a savings pot (accessible) and a retirement pot (preserved). Understand the rules before you withdraw.
The Two Pots Explained
Savings Pot (1/3)
- ✅ Accessible before retirement
- ✅ Withdraw once per tax year
- ✅ Minimum withdrawal: R2,000
- ✅ Seed capital: 10% of balance (max R30K) on 1 Sep 2023
- ⚠️ Taxed at your marginal rate on withdrawal
- ⚠️ Reduces your retirement savings
Retirement Pot (2/3)
- 🔒 Preserved until retirement (55+)
- 🔒 Cannot be accessed early
- ✅ Must be used to buy an annuity at retirement
- ✅ Grows tax-free
- ✅ Protected from creditors
- ✅ Preserved on job change
Seed Capital — What Was Added on 1 Sep 2023
| Fund Balance on 1 Sep 2023 | Seed Capital (10%) | Capped At |
|---|---|---|
| R50,000 | R5,000 | R5,000 |
| R150,000 | R15,000 | R15,000 |
| R300,000 | R30,000 | R30,000 (cap reached) |
| R500,000 | R50,000 | R30,000 (cap reached) |
| R1,000,000 | R100,000 | R30,000 (cap reached) |
Frequently Asked Questions
What is the two-pot retirement system?
The two-pot system (effective 1 September 2023) divides new retirement fund contributions into two pots: a savings pot (1/3 of each contribution) and a retirement pot (2/3). The savings pot is accessible before retirement; the retirement pot is preserved.
Who is affected by the two-pot system?
All South African retirement fund members — pension funds, provident funds, and retirement annuities. Members of government (GEPF) and certain exempt funds may have a delayed or modified implementation.
How much can I withdraw from the savings pot?
You can withdraw once per tax year. The minimum withdrawal is R2,000. There is no maximum cap per withdrawal, but you can only withdraw what is in the savings pot. The withdrawal is taxed as income in your hands.
When is the seed capital added to the savings pot?
On 1 September 2023, a once-off seed capital amount was added to the savings pot: the lesser of 10% of your retirement fund balance on that date or R30,000.
What tax do I pay on a two-pot savings pot withdrawal?
Savings pot withdrawals are taxed as income at your marginal tax rate. SARS will issue a tax directive to your fund, and the fund deducts the tax before paying you. This differs from the retirement lump-sum tax table used at actual retirement.
Should You Withdraw from Your Savings Pot?
Speak to a certified financial advisor before accessing your savings pot — the tax and long-term impact can be significant.
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