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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

Wildlife researcher in ground-breaking global research on giraffes
2017-10-20

Description: Giraffe read more Tags: giraffe, conservation, Dr Francois Deacon, Last of the Long Necks, Catching Giants 

Dr Deacon from the Department of Animal, Wildlife and Grassland
Sciences at the University of the Free State (UFS),
lead a multispecialist research group to catch
and collar giraffe to collect data that will
contribute to the conservation of these animals.
Photo: Prof Nico Smith


Capturing 51 giraffes without any injuries or mortalities to collect data that will contribute to the conservation of these animals is not for everyone. Capturing a giraffe with minimum risk to the animal and the people involved, requires extraordinary skill, planning, and teamwork. “This exercise is a dangerous task, since a well-placed kick from these large and extremely powerful animals can cause serious injuries. Early in October was the first time that giraffes were captured on such a large scale,” said wildlife researcher Dr Francois Deacon.
 
Dr Deacon from the Department of Animal, Wildlife and Grassland Sciences at the University of the Free State (UFS), led a multispecialist research group of over 30 people from 10 different countries to collect information about these little-known animals.

UFS first to collar giraffe
Taking a global approach, the team responsible for this intricate process consisted of wildlife biologists, conservationists, interdisciplinary scientists and five specialist veterinarians who are experienced in catching and working with wild animals. Specialised drugs sponsored by Dr Kobus Raath from Wildlife Pharmaceuticals, tested for the first time and administered with a dart gun were used to tranquillise the giraffe, which then allowed for the GPS collars to be fitted.  These collars, sponsored by Africa Wildlife Tracking, enable the researchers to record the location of individual giraffe for up to two years, give 24/7 readings, irrespective of weather conditions. In this cost-effective manner, data can be gathered on climatic factors, giraffe communication, social behaviour, home ranges, seasonal movements, human and giraffe interaction zones, as well as migration routes and the duration of the migration process. The collars will effectively be used to locate individuals to collect faecal samples for hormonal cycles, stress hormones, nutrient deficiencies based on diet and also internal parasites. 

“This knowledge we gain is the key to all keys in saving this iconic animal from becoming extinct,” said Dr Deacon.

Six years ago, during a pilot study, Dr Deacon was the first researcher to fit giraffes with a GPS collar. Collaring is less invasive and allows researchers to collect detailed samples. Not only was extensive knowledge and experience gained during the process, but he also initiated interest from the filmmaker and conservationist, Ashley Scott Davison, executive producer of Iniosante Inc. 

Getting to tell the story

Davison, who was doing research for a film on giraffe learnt about the silent extinction of the species. In a great number of countries giraffe numbers have been declining by as much as 40% over only a few years since 2000. Today West Africa has between 400 to 600 giraffe left while four out of five giraffes were lost in East Africa since 2000. This is a considerable decline in numbers and poses a real threat to the survival of the species in the longer term. At the end of 2016, the giraffe was classified as vulnerable on the International Union for Conservation of Nature Red Data list.

According to Davison, children in school learn about the destruction caused by ivory poaching and habitat loss. But in Africa today, there are six times as many elephants as there are giraffes. 

In the process to find out more about this majestic species Davison learnt of Dr Deacon’s work. After being introduced to and spending time with Dr Deacon, Davison not only describes the UFS as the leader in the conservation of giraffes but he returned to the university, three times to help build a dedicated research team to address unanswered research questions within various disciplines.

Flowing from the affiliation with the UFS is Iniosante’s award-winning production of a documentary, “Last of the Longnecks”. The film has received several awards, including official selection at the 2017 Global Peace Film Festival, the Wildlife Conservation Film Festival and the Environmental Film Festival in the US capital. 

The film team accompanied the multispecialist research team last week to gather footage for a follow-up documentary, “Catching Giants”. This film is expected to air in middle 2018.

 Video clip of the event: https://www.dropbox.com/s/d3kv9we690bwwto/giraffe_UFS_revision-01a.mp4?dl=0

Video clip of the event: RooistoelTV

Former articles on this topic:

18 Nov 2016: http://www.ufs.ac.za/templates/news-archive-item?news=7964 
23 August 2016: http://www.ufs.ac.za/templates/news-archive-item?news=7856 
9 March 2016:Giraffe research broadcast on National Geographic channel
18 Sept 2015 Researchers reach out across continents in giraffe research
29 May 2015: Researchers international leaders in satellite tracking in the wildlife environment

 

 

 

 

 

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