Public warned of tax implication in two-pot withdrawal

Reading Time: < 1 minute

Members of the public have been urged to seek more information on tax implications, as well as the long-term impacts of the two-pot retirement system, before attempting to make a withdrawal.

The two-pot retirement system will open for applications on the 1st of September.

It will allow retirement fund members to withdraw up to 10% of their retirement savings, with a maximum of R30 000.

Head of Consulting Strategy at Alexander Forbes Belinda Sullivan says the taxation of money coming out of the savings component will be at marginal tax rates.

“So essentially members will be paying tax based on how their salary is taxed on a monthly basis. So, in the month that you decide to take money out of the fund could actually increase your taxable income in that period resulting in more tax being paid. So, members need to be responsible about the access and understand what the implications are from a tax perspective and also how that is going to impact your tax assessment at the end of your year.”

Spotlight on the two-pot retirement system