The two-pot retirement system explained
Since September 2024, retirement savings are split so you can reach a small part before retirement while the rest stays locked away.
The three components
| Component | What goes in | When you can use it |
|---|---|---|
| Savings component | One third of contributions from 1 September 2024, plus a once-off seed amount | One withdrawal per tax year, at least R 2 000 |
| Retirement component | Two thirds of contributions from 1 September 2024 | Only at retirement, as an annuity (pension) |
| Vested component | Everything saved before 1 September 2024, with its growth | Under the old rules, which depend on the type of fund |
The system applies to pension funds, provident funds, preservation funds and retirement annuities. When it started, a once-off seed of 10% of the vested component, up to R 30 000, was moved into each member’s savings component so there was something to draw on straight away.
How withdrawals are taxed
A savings withdrawal is added to your taxable income for the year and taxed at your marginal rate, between 18% and 45%. Your fund applies to SARS for a tax directive and withholds the tax before paying you; any tax you owe SARS may also be deducted. Because the withdrawal is taxed like salary, someone earning R 360 000 a year who takes R 30 000 pays about R 8 145 in tax, more than a quarter of it.
What it really costs
The bigger cost is lost growth. R 30 000 left invested at 8% a year would grow to roughly R 205 000 over 25 years. Some funds also charge an admin fee for each withdrawal. The savings component is best kept for genuine emergencies, ideally after building a separate emergency fund.
At retirement
Whatever is left in the savings component can be taken in cash at retirement, taxed under the retirement lump-sum table, or used to buy a pension along with the retirement component. The retirement component must be used to buy an annuity, so it keeps paying you an income in retirement. Retirement annuities allow retirement from age 55.
Frequently asked questions
How often can I withdraw from my savings pot?
Once per tax year (1 March to the end of February), and the minimum is R 2 000.
Can I withdraw everything in my retirement fund now?
No. Only the savings component is available before retirement. The retirement component is locked until you retire, and the vested component follows the old rules.
Do I have to withdraw from my savings pot?
No. It is optional. If you leave it, it keeps growing and can be taken at retirement.
Related calculators
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What your savings could grow to by retirement.
Open calculator →Two-pot rules in force from 1 September 2024; see SARS: two-pot retirement system. Example tax uses the 2026/27 SARS income tax tables. Checked 13 October 2026. This guide is general educational information, not tax or financial advice.