If you plan to withdraw retirement savings from your savings pot after the two-pot retirement system comes into effect on September 1, you need to take into consideration the costs and taxes that will be deducted from your withdrawal. The deductions may be more than you realise, especially if you are in a defined-benefit fund.
The legislation allows for your savings pot the one-third portion of your savings to which you will have access once a year to be seeded with capital from your existing savings, the so-called vested pot. The different portions of your retirement savings are officially called components but are widely known, and referred to here as pots. This will be 10 of your existing savings to a maximum of R30 000.
You may be tempted to withdraw money straight away, and there may be valid reasons for doing so. The recently published 2024 Sanlam Benchmark Survey of retirement funds shows an increase in people intending definitely to access savings in this manner from 13 of respondents last year to 22 this year. This has risen in line with increases in indicators measuring financial stress, suggesting that many people may be considering withdrawing their accessible savings simply to alleviate mounting financial pressures.
Apart from the opportunity cost of not leaving your savings to grow until you retire, there will be various immediate costs, resulting in a lower cash amount than you may expect in certain instances far lower.
Actuarial fees