Two-Pot complaints: understanding the limitations

THE two-pot retirement system, introduced on September 1, 2024, has now been in effect for over a year, yet confusion around its rules continues to generate complaints, this is according to the Office of the Penson Fund Adjudicator (OPFA).

- DIEKETSENG MALEKE [e-mail]

It says despite extensive education efforts by the retirement funds industry, many South Africans remain unclear about the limitations of the system, particularly regarding access to the savings pot.

The Office of the Pension Funds Adjudicator (OPFA) describes itself as a statutory body established to resolve disputes in a procedurally fair, economical, and expeditious manner.

The OPFA says under the current framework, members may withdraw from their savings pot once per tax year, with a minimum withdrawal of R2 000. The maximum withdrawal is limited to the balance available in the savings pot, and withdrawals are taxed at the member's marginal income tax rate.

If a member owes money to Sars, the withdrawal may be reduced to offset that debt. These rules are strictly enforced, and the OPFA has received several complaints from individuals who misunderstood the system's constraints, it says.

The two-pot retirement system, implemented on September 1, 2024, allows members to access a portion of their retirement savings before retirement without resigning from their jobs. This system splits contributions into three components:

Vested pot: Contributions made before September 1, 2024, which remain subject to old rules.

Savings pot: This is constituted of your seeding capital plus one-third of new contributions (post-implementation). Withdrawals from the savings pot can take place before retirement or resignation, subject to a minimum amount of R2000. There is no upper limit on the amount that may be withdrawn from the savings pot, and the amount in the savings pot can be accumulated over time; however, only one withdrawal per tax year is permissible.

Retirement pot: Two-thirds of new contributions are preserved until retirement.