Latest News Archive

Please select Category, Year, and then Month to display items
Previous Archive
20 August 2025 | Story Dr Annelize Oosthuizen | Photo Supplied
AnnelizeOosthuizen
Dr Annelize Oosthuizen, Subject Head of Taxation in the School of Accountancy, University of the Free State.

Opinion article by Dr Annelize Oosthuizen, Subject Head of Taxation in the School of Accountancy, University of the Free State 

 


 

With the two-pot retirement system having been effective from 1 September 2024, it is important to demystify certain aspects to prevent an unpleasant surprise when you retire. Although there are other complex rules, this article was simplified and does not deal with exceptions. It also does not deal with members of a provident fund who were 55 years of age or older on 1 March 2021. Furthermore, reference to retirement funds is to a pension fund, provident fund or a retirement annuity fund (a discussion on preservation funds is therefore excluded).

 

Three, not two pots

Firstly, there are effectively three pots and not two.

  • The first pot is referred to as the vested component. You will only have this component if you were a member of a retirement fund prior to 1 September 2024. This component consists of the member’s interest (balance) in the retirement fund on 31 August 2024 (the day before the implementation of the two-pot system) after being reduced with the amount of the seed capital that was transferred to the savings pot (see below).  This seed capital amount was calculated as the lesser of 10% of the value of the member’s interest in the fund on 31 August 2024 or R30 000. No further contributions will be allocated to this component from 1 September 2024. Upon retirement, one-third of the funds in this component can be taken in the form of a lump sum. The balance will be transferred to the retirement component below and will be paid out in the form of monthly annuities. 
  • The second pot is the savings component. The opening balance of the savings component is the seed capital that was transferred from the vested component above. Thereafter, from 1 September 2024, one third of your monthly contributions to the retirement fund are allocated to this component.
  • The third pot is the retirement component. From 1 September 2024, two-thirds of your monthly contributions to the retirement fund are allocated to this component. The funds in this component can only be accessed upon retirement (i.e. after reaching your retirement age, which is stipulated in the fund rules). Furthermore, upon retirement, the money in this pot is only paid out in the form of monthly annuities (i.e. monthly pensions) and no lump sum can be taken from this pot unless its total value is R165 000 or less.

Withdrawals are taxed unfavourably

Secondly, withdrawing from the savings component before retirement has adverse tax implications.

  • From 1 September 2024 onwards, one is allowed to make an annual withdrawal (minimum of R2 000) from the savings component even if you have not yet reached your retirement age and although you are still employed. It is, however, important to remember that such withdrawals are taxed very unfavourably since they are taxed by using the normal progressive tax tables that apply to your other income such as salary. If you wait for your retirement and only withdraw from this savings component upon retirement, the first R550 000 will be tax-free and withdrawals above R550 000 will be taxed at rates much lower than the current progressive tax rates applicable to other income.
  • Upon retirement, only the money in the savings component is allowed to be taken as a lump sum.  If you therefore withdraw all the money from this pot annually prior to retirement, you will not have any funds available to access as a lump sum on retirement and will only have access to the monthly annuities payable from your retirement component.

Less funds available

Lastly, for those members who have a vested component (i.e. who became members of the retirement fund before 1 September 2024), the old rules still apply to the funds in that component. Therefore, upon retirement, you will still be able to take one third of the value of your vested component as a lump sum. The balance will be transferred to the retirement pot and will be paid out in the form of monthly annuities.

To summarise, even though it might appear lucrative to withdraw from your savings component annually, it is advised that you refrain from doing it unless you really need the funds to fulfill basic needs. Withdrawing prior to retirement has the following adverse consequences:

  • Money withdrawn from the savings component is taxed at higher rates than what would have applied had you reached your retirement age and retired. You will therefore not make use of the R550 000 tax-free option.
  • You will have less funds available to pay out as a lump sum on retirement. As a simple calculation, had you not withdrawn R30 000 in a single year, conservatively calculated at a rate of 5%, this R30 000 would have grown to R79 599 (R139 829 if a rate of 8% is used) calculated over 20 years that can be withdrawn tax-free when utilising the R550 000 tax-free portion on retirement.

News Archive

National Human Trafficking Resource Line a victim-centred approach to combating crime
2017-08-24

Description: Beatri Kruger Tags: Beatri Kruger 

Prof Beatri Kruger, Adjunct Professor at the
UFS Faculty of Law. Photo: Supplied

As a response to the rising number of human trafficking cases in South Africa and around the world, key role players in various fields have pulled together to come up with workable solutions on how to stop the crime and assist victims. Some of the work being done by NGOs and law enforcement agencies has been supported by insights from research conducted in communities and by academic institutions. According to Prof Beatri Kruger, Adjunct Professor of Law in the Faculty of Law at the University of the Free State and experienced researcher in human trafficking, support for victims has grown in leaps and bounds with the help of the latest technology. More and better quality information can be collected to strengthen efforts of combating the crime,” she said.

One such technological development is the national Human Trafficking Resource Line, which provides various services, including information on trafficking activities, assistance to agencies working with victims of trafficking in persons (TIP), creating a network from which data can be collected, analysed, and activities tracked, in order to ensure the best service to victims.

The resource line connects callers, often victims of TIP or anonymous tippers, to service providers in social services, law enforcement, places of safety, medical facilities, and government agencies, especially during emergencies. 

Resource line a helping hand to victims

The resource line was established in 2016 and has replaced the previous helpline. This line provides more services and resources than just a helpline. Through partnerships, it works to strengthen local and national structures that can assist victims over the phone. 

Call specialists are trained by Polaris, an American company using international standards and protocols. The call specialists are available 24/7 to take reports of human trafficking confidentially and anonymously. They put victims in touch with service providers for health screening, counselling, and repatriation if they are from another country, and also assist with case management.

Empowering service providers is the key to success

Support for service providers such as NGOs, safe houses, and government departments in the network is in the form of skills training programmes for staff, and a referral system in various provinces around the country. There are good referral partners in each province, as well as provincial coordinators ensuring accountability regarding cases, mobilising services for victims, and coordinating the referrals and response.  

To strengthen the network further, services provided in each province are being standardised to ensure that the right people are contacted when handling cases, and that key stakeholders in each province are used. The strength of the provincial provider network is key to offering victims of human trafficking the services they need.

Human trafficking is a crime that permeates multiple academic disciplines and professions. Therefore, information collected from victims through such a helpline and collated by agencies, will assist academic institutions such as the UFS in furthering their research, while strengthening the content of academic programmes in fields such as law, law enforcement, social sciences, health sciences, and international relations.

The number to call for reporting or providing tips on TIP-related crimes and activities, is 0800 222 777.

We use cookies to make interactions with our websites and services easy and meaningful. To better understand how they are used, read more about the UFS cookie policy. By continuing to use this site you are giving us your consent to do this.

Accept