2 POT RA SYSTEM Two-Pot Retirement System | What You Should Know | Sanlam

Your existing retirement contributions (past and future) will be divided into three components (previously referred to as pots). Your accumulated retirement savings up until 31 August 2024 will go into a vested component.

From 1 September 2024:

• One-third of your contributions will go to your savings component. This will receive a once-off capital boost from your vested component (minimum of 10% of your retirement fund value on 31 August 2024, up to R30 000). After that, one-third of all new contributions will go into this component, which will also grow by investment returns.
• The remaining two-thirds of all new contributions will go into a retirement component. These contributions, together with all further growth and earnings cannot be touched until retirement. These savings must then be used to buy a retirement income, unless legislated minimum values apply.

For example, if you contribute R3 000; R2 000 will go to your retirement component, and R1 000 will go to your savings component. You will only be able to access your savings component once the balance reaches a minimum value of R2 000. This does not include any contributions you made up until 31 August 2024.

These are all the savings that accumulated in your retirement fund up until 31 August 2024. These retirement savings will continue to be regulated in terms of the rules that apply up to 1 September 2024. Where applicable, your vested and non-vested rights or portions, as of 31 August 2024, will form part of the vested component.

For example:

• For retirement annuities generally, you cannot touch these savings until you retire.
• For pension and provident funds, the vested component will still be exempt from compulsory preservation, so you can withdraw a taxable lump sum should you resign or be retrenched
• For preservation funds, current rules will still apply, and all existing vested rights will be retained.

Legislation allows you to, however, there are minimum limits on the amount and the number of times you can withdraw. The exact date you can make your first withdrawal is dependent on the retirement fund you are a member of.

Your vested component will provide initial capital for your savings component. 10% of your fund balance on 31 August 2024 (capped at R30 000) will be allocated to your savings component. You need a balance of at least R2 000 before you can make a withdrawal.

For example, if your fund has R30 000 in it on 31 August 2024, R3 000 will be transferred to your savings component.

Every withdrawal you make from your savings component is added to your taxable income and will be taxed at a fixed marginal tax rate at the time of withdrawal.

• For pension funds and provident funds, you will be able to access all the savings in your vested component as well as your accumulated savings in the savings component.
• For retirement annuities, you will only be able to access your savings component.

Yes, it can matter for provident fund members.

On 1 September 2024, provident fund members who were 55 years or older on 1 March 2021 can choose to:

• Contribute to the vested component (until you retire or leave the fund) or
• Participate in the two-pot system and split all new contributions between savings and retirement components. You will then no longer be able to contribute to the vested component.

Your retirement annuity will be exempt from the two-pot retirement system if it is a legacy policy that conforms to specific characteristics in the draft legislation.

Please speak to your financial adviser to understand what the two-pot retirement system means for you, specifically. Together, you can ensure that you stay on track to reach your retirement goals.