The two-pot retirement system, explained simply
Since September 2024 your retirement savings are split into a savings pot and a retirement pot. Here's what you can touch, what you can't, and what it costs.
6 min read
If you joined a pension fund, provident fund, or RA after 1 September 2024 — or were already in one — your contributions no longer go into a single locked box. They're split into two "pots".
The split
Every contribution you make is divided automatically:
- One-third → savings pot. You can withdraw from this before retirement.
- Two-thirds → retirement pot. Locked until retirement, full stop. At retirement it must buy an income (annuity).
Funds that existed before the change also carried a vested pot — your old savings, still governed by the old rules.
The savings pot rules
- You can withdraw once per tax year (1 March – end February).
- Minimum withdrawal: R2,000.
- The withdrawal is added to your taxable income and taxed at your marginal rate — plus your fund may charge an admin fee.
That last point is the trap. If you earn R400,000 and pull R20,000 from your savings pot, that R20,000 is taxed at 31%. You give up R6,200 to SARS for money that was meant to compound for decades.
Why the system exists
Before two-pot, people resigned from jobs specifically to cash out their pension — destroying their retirement and often paying heavy tax to do it. The new system is a compromise: emergency access to a slice, hard preservation of the rest. You can now change jobs without the temptation to cash out everything.
What it means for you practically
- Don't treat the savings pot as a bonus account. It's still retirement money; the once-a-year access is for genuine emergencies.
- An emergency fund is still job one. Cash in a bank account is tax-free to access. A savings-pot withdrawal never is. Read why an emergency fund comes first.
- Your tax deduction is unchanged. Contributions are still deductible up to 27.5% of income (max R350,000/year) — run your numbers in the RA calculator.
The bottom line
Two-pot gives you a break-glass option without letting you torch your future self's income. The best strategy for most people is to pretend the savings pot doesn't exist.