Two-Pot Retirement System
The two-pot retirement system changed how your retirement savings work in South Africa: part of what you save can now be reached before retirement, while most of it stays locked away for later. This section explains the three components your savings are split into, how withdrawals are taxed, and what it all means for your money.
Last updated: May 2026 · Source: SARS · National Treasury
What the Two-Pot System Is
Introduced on 1 September 2024, the two-pot system was designed to solve a long-standing problem: before it, the only way to get at your retirement savings before retirement was to resign and cash out — which left many people with nothing later. Under the new system, your retirement fund contributions are split so that a portion is available in an emergency, while the larger portion is preserved to make sure you still have an income when you retire. It applies to most pension, provident, retirement annuity and preservation funds.
The Three Components
Your savings sit in three “pots,” each with its own rules:
| Component | What’s in it |
|---|---|
| Vested | Everything you saved before 1 September 2024. The old rules still apply to it. |
| Savings | One-third of your contributions from 1 September 2024, plus your starting “seed capital.” You can withdraw from it before retirement. |
| Retirement | Two-thirds of your contributions from 1 September 2024. Locked away to provide an income at retirement. |
To start the system, your fund moved a once-off “seed capital” amount into your savings component — 10% of your vested savings, capped at R30,000.
What You’ll Find in This Section
- Two-Pot Withdrawal Calculator — estimate what a savings-pot withdrawal would leave you after tax.
- Retirement Lump-Sum Tax Tables — how lump sums are taxed at retirement and on withdrawal.
- Guides — plain-language explainers on how the pots work and how withdrawals are taxed.
How Withdrawals and Tax Work
You can take money from your savings component once per tax year, as long as you withdraw at least R2,000 and have that much available. The catch is tax: a savings withdrawal is added to your income and taxed at your marginal rate — the same rate as your salary — with no tax-free portion, so a large withdrawal can be taxed more heavily than people expect. Your fund applies to SARS for a tax directive, deducts the tax (and any tax you already owe SARS), and pays you the balance.
Your retirement component cannot be touched before retirement, even if you change jobs or are retrenched — it is there to buy you an income later. Your vested component keeps following the old rules. Because taking money out now means less for retirement, a withdrawal is best treated as a last resort.
Also in South Africa
📋 Verified — Official sources: SARS (two-pot system) · National Treasury
⚠️ This page is for informational purposes only and does not constitute legal or financial advice. KnowMyGovt is not affiliated with SARS nor the South African government. Always confirm current rules on the official SARS website or with your retirement fund.
