Focus on Two-Pot Retirement Withdrawals
South Africa’s two-pot retirement system, implemented in September 2024, fundamentally changes how employees access their retirement savings. The system divides contributions into two parts: a savings pot, allowing limited withdrawals, and a retirement pot, which remains preserved until retirement.
As of February 2025, over R43 billion has been withdrawn, highlighting both the financial relief it provides and the risks it introduces. Withdrawals are taxed at marginal rates and could reduce long-term retirement savings, making financial education essential. Some employees have even received no payouts due to outstanding tax debts or misreported income.
For employers, this reform brings new responsibilities. Educating employees on the impact of early withdrawals, tax considerations, and financial planning is critical. Business leaders can support their workforce through financial wellness programs, workplace guidance and access to expert advice to ensure employees make informed decisions.
Our latest feature explores the practical implications of the two-pot system, withdrawal trends and actionable steps for employers to help their teams navigate these changes responsibly.
In the video below, Nelson Tjiane discusses the subject of the two-pot retirement withdrawal option with an employee. This is an essential discussion that business leaders should have with their teams:
Useful Resources:
What is the two-pot retirement system?
The system divides retirement contributions into two pots: a savings pot, from which employees can withdraw annually (subject to certain limits), and a retirement pot, which remains preserved until retirement.
How much can employees withdraw from the savings pot?
How does the system impact long-term retirement savings?
What should employers do to support employees?
Employers should provide financial education, tax guidance and access to financial wellness programs to help employees make informed decisions.
What are the key tax implications of withdrawals?
Withdrawals are subject to income tax at marginal rates, which could push employees into a higher tax bracket. Some individuals with outstanding taxes may receive no payout at all.
In-depth Analysis:
How to guide your employees with their Two-Pot Retirement choice
By Nelson Tjiane