The amendment law introduces a “two-pot” retirement system to address the concerns related to lack of preservation before retirement and access to retirement funds in financial distress.
- 10% of retirement fund value before 1 September 2024, to a maximum of R30 000.
- 1/3 of future retirement fund contributions.
- One emergency withdrawal per tax year at a minimum of R2 000 before tax and to a maximum of what is available in the savings pot.
- Withdrawals from the savings pot will be taxed at your marginal tax rate. Please take note that if you wish to make a withdrawal from your Savings Pot, any pending SARS IT88 orders (penalties owed to SARS wherein they have issued a notice of the penalty) will be deducted from the proceeds of the savings pot withdrawal.
- A flat administration fee will be charged on each withdrawal.
- The full amount can be withdrawn at retirement as a cash lump sum, taxed according to the retirement tax table.
- 2/3 of your retirement contributions, from 1 September 2024.
- No access until retirement, not even on resignation
- Full value must be used to purchase an annuity on retirement.
- Existing retirement investment before 1 September 2024 less 10% of the retirement value (capped at R30 000)
- Governed by existing Pension Funds Act and Fund Rules up to 1 September 2024.
- At retirement, a cash portion may be withdrawn and an annuity bought with the remainder as defined by the current Pension Funds Act and Fund Rules.
- In case of withdrawal from the Savings Pot, the non-member spouse must give consent of such withdrawal.
- No withdrawal will be permitted in case of a pending maintenance order against the fund until the fund has ascertained that there is sufficient funds in the investment to comply with the order.
Please note that the onus to inform the fund administrator of any divorce decrees and pending maintenance orders is on the clients (member and non-member). This is to be done before any transaction process is instituted.
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Old Mutual Wealth has an agile digital platform that allows you to effectively manage your retirement fund and all other investment solutions with Old Mutual Wealth and Unit Trusts efficiently. Please make sure that you are registered on our Old Mutual Wealth and Unit Trusts Secure Client Website and keep your personal information updated.
- Before transacting, please ensure that your personal information such as South African tax number, I.D. number, address, cellphone number etc. is up-to-date and current for ease of processing.
- You must first determine amounts eligible for withdrawal. You can view the withdrawal amount (before tax) on the ELIGIBILITY TOOL in the OLD MUTUAL WEALTH AND UNIT TRUSTS SECURE PLANNER CLIENT WEBSITE (see above).
- Once you have decided on an amount to withdraw, please follow the withdrawal process on the ELIGIBILITY TOOL.
- The period from your request to withdraw to payment is depended on SARS issuing a Tax Directive and IT88 Orders, which is a process that is not in Old Mutual Wealth’s control.
- Please note that Old Mutual Wealth contracts will not be able to be viewed using the Old Mutual Group WhatsApp solution.
The two-pot system is a change to South Africa's retirement savings structure to improve financial security, encourage long-term retirement savings and create a structured approach to allow investors limited access to their retirement funds in times of need.
From the effective date of 1 September 2024, retirement fund contributions will go into two pots – a savings pot and a retirement pot. One-third of members’ contributions will go into the savings pot with access once every tax year in an emergency or when needed. The remaining two-thirds will go into the retirement pot with no access until retirement.
This new system will affect all types of retirement funds i.e. pension, provident, retirement annuity, and preservation funds. Provident and preservation fund members who were over 55 years or older on 1 March 2021 can elect to participate in two pot system. These members have twelve months to make their elections from 1 September 2024 to 31 August 2025.
The two-pot system will allow access to a portion of your retirement savings once per tax year, known as the savings pot. However, you will not be able to access the retirement pot which will contain two-thirds of your contributions until you reach retirement age. The system will have no impact on your annuity options at retirement.
Yes, your financial planner will be able to assist you in navigating this reform. Old Mutual Wealth is taking active steps to ensure its financial planners are well-informed and equipped to guide you through these changes.
Old Mutual Wealth and Unit Trusts provide two-pot retirement content on this page, offering a wealth of resources to help you understand the new retirement funding system to ensure that you stay on track with your long-term financial plans.
The two-pot system primarily affects how future retirement fund contributions are managed. Provident and preservation members who were over 55 years or older on 1 March 2021 have a choice to participate in two-pot system. These members have twelve months to make their election from an effective date still to be communicated.
There is currently no indication of any changes to Regulation 28 of the Pension Funds Act. Regulation 28 sets limits to where people should invest their retirement savings.
On 1 September 2024, a maximum of 10%, capped at R30 000 of the member’s existing retirement investments will be used to fund the accessible savings pot, this is called the seeding amount. This will be an automatic allocation to the savings pot, except for the category of preservation and provident fund members who need to opt-in.
Contact your Financial Planner for advice or contact the Old Mutual Wealth Servicing Centre at 0860 999 199 or email service@omwealth.co.za.
You can access money from the savings pot before you retire, but only once per tax year. The minimum withdrawal amount from the savings pot is R2 000. There is no maximum amount. Withdrawals from the savings pot will be taxed. A withdrawal fee will be applied.
You may submit a withdrawal request from your savings pot after 1 September 2024. The payment of the withdrawal amount is subject to processing times, system volumes, and SARS issuing a Tax Directive.
If members access their savings pot before retirement, this will reduce the amount they can withdraw as a lump sum at retirement. They will also lose the retirement tax benefit as any savings withdrawals will be taxed at the client’s marginal tax rate.
Old Mutual Wealth will be charging a flat fee for the administration of withdrawals from the savings pot.
Communication will be sent directly to clients and their planners. In addition, clients can find information on our website or by registering on the secure site.
For your Old Mutual Wealth and Unit Trusts retirement contracts, this information will be reflected on your Retirement Benefit Report which is available on the Old Mutual Wealth and Unit Trusts secure portal.
The withdrawal option will only become available from 1 September 2024. Please log on to the Old Mutual Wealth and Unit Trusts Secure Portal and select the Two-Pot Eligibility option.
A table will display your qualifying contracts.
Divorce orders will be paid proportionately from all the pots in a client’s retirement investment. It is the responsibility of the member or non-member to inform the fund of any divorce proceedings or decrees before the withdrawal process starts. For savings pot withdrawals, consent is required from the non-member spouse if a divorce has been instituted.
Your retirement pot will automatically start accumulating after 1 September 2024, from your contributions. Two thirds of your contributions will go into your retirement pot and one third to your savings pot.
For assets accumulated after 1 September 2024, if your savings pot is empty at retirement, you will not be able to access any cash lump sum at retirement. Your retirement pot will be used to purchase a pension income.
Note: if you have a vested pot at 1 September 2024, you can access some of this balance as a cash lump sum.
The new rules will only apply to new contributions after 1 September 2024. All retirement savings up to the effective date will be ringfenced as the “vested pot”, and the existing rules will continue to apply to them.
Transfers between retirement funds are allowed. The over-arching rule is that the pots of the transferring company need to be transferred into the reciprocal pots of the transferee company. A savings pot must transfer into another savings pot and a retirement pot into another retirement pot.
The South African Revenue Services (SARS) has indicated that all savings pot withdrawals will be taxed at your marginal tax rate. SARS will also enforce IT88 orders where applicable. IT88 are administrative penalties administered by SARS that taxpayers have not yet settled.
Once we get an instruction to withdraw and all requirements have been met, we will request a tax directive from SARS. Upon receipt of the tax directive, the tax amount will be deducted from your withdrawal amount.
The two-pot system does not impact the tax deductibility of contributions; this remains unchanged.
Members submit complaints to website https://www.oldmutual.co.za/customer-compliments-and-complaints/. The current dispute or complaints processes via the Pension Fund and the FAIS Acts will still apply.
Read insights on the two-pot retirement system