Two-pot system no cash cow
By: Anthony Fineberg - Business Day
Those hoping for a quick cash injection when SA formally switches on the “two - pot ” pension system in September may need to tread warily.
While there was a delay in implementation from early 2024, come September 1 2024 your retirement savings will be split into a vested, savings and retirement component. Industry is gearing up for a sudden surge in withdrawal requests.
In a nutshell, in September you will be able to make partial withdrawals from your retirement funds before retirement, but must preserve a portion that can only be accessed at retirement to help improve retirement outcomes. New seed capital rules also give another option to withdraw from built-up funds.
While it may be tempting to make a withdrawal as soon as possible, keep in mind that you will be giving up the amount drawn plus all interest on that amount in retirement. Plus, if you wait to withdraw money from the savings component until retirement, it will attract less tax.