Two Pot Explained

Home / – Pension and Provident Fund Members

Want to use our Solution Services?

Please feel free to send us a message or contact us directly.

Emotional winner lady woman elderly senior grandmother receiving money pension loan budget transfer

Two Pot Explained- Pension and Provident Fund Members

PROVIDENT & PENSION FUND MEMBERS

From 1st September 2024 your pension fund contributions and growth will be split into THREE POTS, your VESTED POT, SAVINGS POT, and your RETIREMENT POT. Also known as the TWO POTS.
These rules will apply to all types of Retirement funds i.e., Provident funds, Pension Funds and Retirement Annuities.

VESTED POT EXPLAINED:
All Pension or Provident contributions and growth up until the 30th of August will be called your VESTED POT.
On Resignation Your VESTED POT can be withdrawn, normal lump sum tax table will apply.
On Retirement You can withdraw a lumpsum or add your VESTED POT towards your RETIREMENT POT for an increased annuity income.

SAVINGS POT EXPLAINED:
One Third (1/3) of your total Pension or Provident fund contribution will allocate towards your SAVINGS POT (access pot)
A withdrawal is allowed once a year for emergency purposes.
The amount withdrawn will be taxed as income tax at your marginal tax rate.
A minimum of R2000 must be withdrawn.
You can ad your SAVINGS POT towards your RETIREMENT POT at Retirement.

SEEDING CAPITAL EXPLAINED:
10% of your VESTED POT up to the max of R30 000 will be allocated towards your SAVINGS POT.

RETIREMENT POT EXPLAINED:
Two Third’s (2/3) of your total Pension or Provident fund contributions will allocate towards your RETIREMENT POT.
Your RETIREMENT POT can only be accessed as a monthly annuity income once you retire from the age of 55 or onwards.
No Lumpsum withdrawals are allowed in your RETIREMENT POT.

Important notes at this point:
All EXISTING PROVIDENT and PENSION fund members who have reached the age of 55 at the date of 1st March 2021 will be allowed an IN or OPT OUT option.
Existing PRESERVATION FUND,LIVING ANNUITY AND GUARANTEED INCOME members are not affected by these new changes. The old rules still apply.

CLIENT ZONE