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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

Centenary medals awarded
2004-10-15

Speech, Rector and Vice-Chancellor: Prof. Frederick Fourie

Op 28 Januarie 2004 het ons die honderdste herdenking van die geboorte van hier­die hoër onderwys instelling gevier met ‘n groot partytjie voor die Hoofgebou. Dit was ‘n wonderlike en vreugdevolle aand.

Die historiese prosessie tydens die amptelike opening van 6 Februarie 2004, in kleurvolle akademiese togas, vanaf ons wortels in Grey-Kollege tot by die Hoof­gebou, het die reistog vanaf die verlede na die hede treffend ge­simbo­liseer.

Talle ander eeufeesgeleenthede het gedurende hierdie jaar plaasgevind. Woensdagaand het ons die premiêre van ‘n dokumentêre film oor koning Moshoeshoe beleef – ‘n belangrike eeufeesprojek van die UV wat onder meer gemik is op die ontwikkeling van ‘ n gedeede geskiedenisbesef – a shared sense of history – and the celebration of a very special leadership, of a spirit of nation-building and reconciliation, in somebody like king Moshoeshoe (also MT Steyn and others…)

Last night we experienced a wonderful and moving honorary doctorary ceremony, with a wonderful group of South Africans like Khotso Mokhele, Antjie Krog, Jakes Gerwel, Van Zyl Slabbert, Jaap Steyn, Saleem Badat, and others - giving so much food for thought.

This evening, where we honour outstanding contributors to the development of this University, is a suitable moment to reflect on the course of the first 100 years of the University of the Free State.

1. ‘n Voëlvlug oor die geskiedenis: die vyf fases

1.1 Eerste fase: 1904 – 1927 (Eerste kwarteeu)

Eerste wankelende treë in die totstandkoming van die
Grey Universiteitskollege

Gedurende 1904 – 1920 word die eerste en mees basiese vakke in geestes- en natuurweten­skappe ingestel, eerste Senaat en eerste Raad saamgestel, en eerste geboue opgerig (hoofgebou en manskoshuis). Teen 1920 was daar egter slegs ongeveer 100 studente, die instelling was finansieel in die knyp, met geen vooruitgang en groei, en ook nie ‘n vaste rektor nie – klaar­blyk­lik was die GUK nog geen lewensvatbare instelling nie. Vrystaatse kinders word steeds eerder na ander universiteite gestuur.

Hierna maak ds JD Kestell, rektor 1920 – 1927, ‘n reuse bydrae om ‘n versukkelde, arm, klein universiteitskollege lewensvatbaat te kry. Hy slaag met fonds­insameling en oortuig Afrikaanse én Engelse ouers om hulle kinders na die GUK te stuur. Teen 1927, met 420 studente, word die eerste nederige mylpale van kritiese massa bereik te midde van ‘n steeds armoedige Vrystaat­se gemeenskap en ‘n studentekorps met gelapte klere. [Maar ook die tyd waarin die Reitz-saal, waarin hierdie plegtigheid plaasvind, gebou is.]

1.2 Second phase: 1927 – 1950 (Tweede kwarteeu)

The Grey University College becomes a fully fledged university

By 1950 the establishment of main basic and career-oriented faculties were completed – Faculty of Commerce in 1937; Faculty of Law as wel as the Faculty of Education in 1945. Student numbers reached 1000 in 1950.

Die UKOVS beleef en oorleef die Groot Depressie, die armblankevraagstuk, die Tweede Wêreldoorlog, taal- en politieke stryd onder Afrikaners, en die stryd van Nat vs Sap, ook op die kampus. Die tydperk word veral gestempel deur die taalstryd met DF Malherbe (rektor 1929 – 1934) as sterk kampvegter vir Afrikaans. Veral na 1948 volg rektor Van der Merwe Scholtz ‘n doelbewuste enkel­talige Afrikaanse rigting (Christelik-nasionaal).

1.3 Derde fase: 1950 – 1976 (Derde kwarteeu)

Ongekompliseerde groei ná onafhanklikheid

Hierdie periode word gestempel deur verkryging van onafhanklikheid as universiteit op 18 Maart 1950. Daarna beleef die UOVS onder rektore Scholtz, Flippie Groene­woud en Benedictus Kok stelselmatige groei sonder beduidende finansiële kommer. Die UV is duidelik ‘n Afrikaanse ‘volksuniversiteit’ op Christelik-nasionale grondslag, onlosmaaklik in­gebed in die dominante politieke bedeling van apartheid en afsonder­like ontwikke­ling. Dit is die hooggety van Afrikaner (en blanke) self­vertroue en heerskappy. Vir personeel sowel as studente is dit ‘n relatief onge­kom­­pliseerde tyd getipeer deur groeiende voor­spoed in die blanke en Afrikaanse gemeenskap, goeie werksvooruitsigte vir studente, kommer­lose studentepret, en min spanning op die kampus.

The academic focus is on teaching, especially to provide staff for the growing public service and education sectors. Research has a low profile. More career-oriented or professional faculties are established: agriculture in 1958 and the medical faculty in 1970. Student numbers reach 2000 in 1960, 4000 in 1970 en 7000 in 1975. Many new residences and academic buildings are erected, especially in the Kok-era.

Teen 1976 was die vernaamste boustene van ‘n medium-grootte universiteit in posisie: onafhanklikheid, genoeg fakulteite, genoeg koshuise en akademiese geboue, goeie sport en kultuur. Op die oog af is die ideaal van volwaardige, onaf­hanklike universiteit verwesenlik.

1.4 Vierde fase: 1976 – 1989

Op koers na die jaar 2000: van die statiese na vernuwing

Politieke onstabiliteit en oorgang in die land begin met die Soweto-onluste, die drie-kamer parlement, PW Botha se Rubicon-toespraak, noodtoestande, die ‘struggle’ en opkoms van UDF, en so meer. Die UOVS is swaar onder die indruk van die ‘totale aanslag’ en die regering se totale teen-strategie. Die Universiteit word polities en akade­mies geïsoleer en intellektueel gemarginaliseer. Ekonomies is dit moeiliker tye na die oliekrisis en die begin van hoë inflasie, en die Staat se finansies wat begin knyp.

Academically this period is distinguished by the strong stimulation and support of the research capacity and orientation by rector Wynand Mouton, which leads to a significant growth in research, especially in the natural sciences. The faculty of Theology is establishyed, the Sasol-UFS library erected. Student numbers continue to grow, but at a much slower rate then before.

Twee ander fasette kenmerk hierdie tydperk: eerstens die toelating van die eerste swart studente (nagraadse 1978, voorgraads 1988) en die begin van die era van multikulturaliteit; tweedens, die begin van subsidie- en finansiële probleme en die eerste rasionalisasie van personeel. Albei hierdie is voortekens van ingewikkelde jare wat sou volg vanaf 1990.

1.5 Fifth phase: 1990 – 2004: The turn of the century brings winds of change

(a) 1990 – 1996:

Die Francois Retief era word gedomineer deur die gevolge van die politieke verande­ringe deur president FW de Klerk en die vrylating van Nelson Mandela. Die UV ontwaak tot die realiteit van die oorgang na ‘n post-apartheid samelewing en komende ANC regering. Die eerste versigtige trans­for­ma­sie­stappe word ingestel, multikulturaliteit word die groot uitdaging, en die eerste fasiliterende strukture (bv. die Multikulturele Komitee) word gevestig. Die eerste senior swart personeel word aangestel.

The dramatic decision about the introduction of parallel-medium teaching in 1993 signals the start of multilingualism as well as a significant growth in the admission of black students. Total student numbers are stable at approximately 9000, but black student numbers grow to 36% in 1995. Initially the change to parallel-medium impact negatively on staff teaching load and hence onresearch outputs.

Die inkrimping in staatsubsidie lei tot ernstige finansiële probleme, besparings­pogings, grootskaalse rasionalisasie van personeel in veral die fakulteit Lettere en Wysbegeerte, spanning tussen Senaat en rektoraat oor finansies – en mismoedig­heid onder personeel.

(b) 1997 – 2004:

The time of rector Stef Coetzee and his successor is the era of the new democracy and transformation. At the beginning of this phase Afrikaans parents start sending their children to other Afrikaans universities; residence become half full. Tensions arise between student groups. This is followed by the large breakthroughs in student transformation in 1997, which normalises the situation. The University becomes a leader in transformation. This leads to the acceptance of the multicultural and multilingual character, on a Christian foundation, of the University. The name changes to the University of the Free State (UFS).

Met ‘n finansiële krisis en verdere rasionalisasie van personeel op hande word die akade­miese en finansiële ‘draaistrategie’ in Januarie 2000 geloods. ‘n Drama­tiese finansiële ommekeer lei tot herinvestering in kampus­fasiliteite en toerusting, ‘n toename in personeel en beduidende verhoging in vergoeding bokant inflasie. Terselfdertyd is daar ‘n opbloei in die akademie: innoverende onderrig­programme, e-leer, ‘n fokus op programgehalte. Konsolidering van fakulteite vind plaas, die Bestuurskool word gestig, daar is sterk internasio­na­lisering en groei in navorsing. Profes­sionele bemarking en strategiese kommunikasie verander die beeld van die UV.

Studentegetalle groei dramaties van 10 000 in 2000 na meer as
23 000 in 2003/4; groei moet nou beperk word. Afrikaanse studente keer terug; koshuise kry lang waglyste. Die verhou­ding tussen wit en swart studente op die hoofkampus is rondom 50:50.

The period ends with the incorporation of the Qwaqwa en Vista Bloemfontein campuses, the approval of a new language policy which also established multilingualism in management and administration, and purposeful efforts to consolidate the foundations of an institutional culture of multiculturalism, multilingualism, non-racialism and non-sexism – a culture of tolerance, embracement and justice in diversity. The Centenary is celebrated with harmony and prosperity on the campus in 2004 (although always with a good sprinkling of unexpected challenges and problems).

2. Vanaand bring ons hulde, en sê ons dankie aan, die bouers van die UV

Oor ‘n honderd jaar het honderde, duisende mense ‘n bydrae gelewer tot die UV se ontwikkeling.

Kom ons eer en dank diegene wat, 100 jaar gelede in a baie arm gemeen­skap wat bykans verwoes is deur die Anglo-Boere oorlog, nooit opgehou droom het oor ‘n eie universiteit om die jongmense te dien, om die mense te dien – die arm Vrystaatse mense van daardie tyd.

Let us honour and thank all those who painstaking built this university from very humble beginnings, from the first fragments and embrio of a university – through a hundred years of various wars, of the struggle, of poverty, of bad times but also good times.

In elke dekade, in elke een van die honderd jaar, is hierdie instelling gebou deur die harde werk, idealisme en verbintenis (“commitment”) van leiers, akademiese personeel, steundiens­personeel, dienswerkers. Laat ons hulle eer en dank.

Let us honour the spirit of commitment and ‘vasbyt’, of ‘never let go’, the determination to overcome obstacles, of timely and pre-emptive adjustment to new challenges and new needs, which made that possible.

Kom ons vier en eer die duisende studente wat in die 100 jaar hier was, wat die spesiale tradisies en spesiale gees geskep het van Kovsiekampus, van Kovsie studentelewe – en wat gedurig nuwe tradisies en gebruike geskep (en gepleeg) het, soos net studente dit kan doen.

Let us celebrate the way this University has, in the last 20 years, once again taken up the challenge of transformation and adjusting to new needs, serving all the people, especially those most in need at this time of our history – thereby closing the circle, going fully “from post Anglo-Boer War to Post-Apartheid”.

Kom ons vier, en wees innig dankbaar vir, die wyse waarop hierdie Universiteit in die laaste 5 jaar gedraai het, finansieel sowel as akademies, en die wonderlike periode van akademiese groei en ontwikkeling en verdieping waarin ons nou staan – tesame met die geleenthede wat QwaQwa en Vista Bfn vir ons bied. Hierdie voorspoed sien ons in die nuwe fisiese aangesig van die kampus, insluitend hierdie wonderlike Eeufeeskompleks.

Let us thank God, the Almighty, who has guided this university through a tumultuous century, for always being there for us, for blessing us in so many ways. In Deo Sapientiae Lux

* * *

So: vanaand is ons hier om erkenning te gee en dankie te sê…

Soveel mense het veel vroeër hul fondament-leggende bydraes gelewer, en alles wat ons vandag hier sien, moontlik gemaak. Selfs mense uit meer onlangse jare is reeds oorlede – enkeles terwyl hulle nog in diens van die UV was, ander na hul aftrede.

‘n Bepaalde groep was bevoorreg en geseend om in die laaste ongeveer 30 jaar by die UV betrokke te kon wees, én om vandag nog in die lewe te wees. Dit is van hulle wat vanaand hier is, en wat vanaand Eeufeesmedaljes ontvang.

Geweldige moeite is gedoen om hierdie proses van seleksie en keuring so billik en deeglik as moontlik te doen. Uiteraard is so ‘n proses nie volmaak nie en sal almal nie saamstem met die uitkomste van die proses nie. Groot moeite is egter gedoen in hierdie fase om mense nie verkeerdelik uit te laat uit of in te sluit in die toekenningslys nie, in volle bewustheid dat daar waarskynlik steeds foute gemaak sal word. Onvermydelik sal daar foute wees, of mense wat uitgelaat is. Ons vra daarvoor nederig om verskoning en begrip.

Billikheid, so ‘n belangrike rigsnoer vir hierdie Universiteit, veral in hierdie tye, lei ons ook dat ons oë oop is vir die bydraes vir mense uit alle afdelings van die Universiteit, wat lei tot ‘n bepaalde balans tussen fakulteite, tussen fakulteite en steundienste, tussen poskategorieë, tussen geslag en ras, en individue soveel as mense in spanverband.

In Deo Sapientiae Lux

God bless this university / Modimo o thlonolofatse yunivesithi ena

Khotso Pula Nala

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