Two-pot retirement withdrawals surpassed R21bn in less than 2 months

JOHANNESBURG - The two-pot retirement frenzy continues as withdrawals surpass the R21 billion mark in less than two months.

The system took effect at the beginning of September, giving pension fund holders access to a portion of their retirement savings.

Under the first-of-its-kind reform, pension funds have now been split into vested, savings and retirement pots as part of a bid to ease financial strain on households.

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The South African Revenue Service (SARS) said that more than one million people had withdrawn from the savings pot since the two-pot system was implemented.

Of the total number of applications, more than 1.1 million tax directives were approved for funds to be released.

SARS said that the remainder were declined for a variety of reasons, including incorrect ID numbers and incorrect tax numbers.

Pension holders accessing their retirement funds are taxed at a marginal tax rate ranging between 18% to 45% depending on their scales.

SARS also said that its systems were still inundated with queries related to withdrawals.

Earlier in the year, the South African Reserve Bank predicted two withdrawal scenarios – with as little as R31 billion or as much as R79 billion which could be cashed out in the fourth quarter of the year.