What you can withdraw

TWO-POT SYSTEM: CONSUMERS MISREAD ELIGIBILITY RULES, FACE REJECTION

- Ina Opperman

ACCESS. Only one savings pot withdrawal per tax year is allowed and only if you're still contributing.

(Picture: iStock)

Although the two-pot retirement system has been running for just more than a year, many people still do not understand the rules and the fact that pension funds cannot make changes to help a specific person, despite the tight financial position they may find themselves in.

The two-pot retirement system recently passed the one-year mark after its implementation on 1 September last year. Many people are eager to access the savings pot, but current rules limit withdrawals to a minimum of R2 000 once per tax year, up to the maximum of what is contained in the savings pot and nothing more.

Withdrawals are taxed at your marginal income tax rate and if you owe money to the South African Revenue Service, your withdrawal may be reduced to pay your debt to the taxman first.

"You would think pension fund members would by now know how the rules work, but that is not the case," said Naheem Essop, deputy pension funds adjudicator.

"Despite a substantial education drive by the retirement funds industry around its implementation, some misunderstandings persist and led to complaints lodged with the Office of the Pension Funds Adjudicator."