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20 August 2025
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Story Dr Annelize Oosthuizen
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Photo Supplied
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.
KovsieSport lauds its heroes of the year
2013-10-20
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Maryka Holtzhausen and Wade van Niekerk
20 October 2013 |
The University of the Free State (UFS) honoured its top achievers at the Loch Logan Waterfront on Friday 18 October 2013. Maryka Holtzhausen and Wade van Niekerk were named the Sportsman and Sportswoman of the year respectively.
The Junior Sportsman and Sportswoman for 2013 are Jacques du Toit and Izelle Lategan.
This year the university’s sport stars were honored in five categories. This includes:
- Sportsman and Sportswoman of the year (everyone that represented South Africa at a senior level, was eligible for the title). The winners each received a trophy and each sportsman and sportswomen in this category were honored with a medal.
- Junior sportsman and sportswoman of the year. The winners each received a trophy.
- Sport stars that represented South Africa at senior and junior level. The achievers received certificates.
- Sport stars that represented the UFS in the national student teams. The sport stars also received certificates.
- Certificates were also awarded to the KovsieSport club sport stars.
The following students represented South Africa at senior level:
- Maryka Holtzhausen was a member of the Protea Netball team that participated in the Fast5 World Series in Auckland, New Zealand, in November 2012. Maryka captained the victorious Protea Netball team in the African Cup in Malawi in May 2013 and was also the captain of the Protea team that toured England in September 2013.
- Adele Niemand was a member of the victorious Protea Netball team in the African Cup in Malawi in May 2013. Adele obtained her 50th cap for the Proteas when she played for the Protea Netball team that toured England in September 2013.
- Izelle Lategan was a member of the SA Senior Women’s Protea team that participated in the World Hockey League Round 1 and 2, as well as in the semifinals of the World Hockey League. Izelle was also part of the Protea Women’s team that participated in the Investec Series in England.
- Tanya Brits was a member of the SA Senior Women’s Protea team that participated in the World Hockey League Round 1 and 2, as well as in the semifinals of the World Hockey League. Tanya was also part of the Protea Women’s team that participated in the Investec Series in England.
- Hananja Steyn was a member of the national team that participated in the African Fencing Championships in Cape Town in 2013. Hananja also participated in the World Championship in Budapest during 2013.
- Elsabe le Roux participated in the WKF Senior World Karate Championships in Paris in 2013. Elsabe was a member of the SA Protea team that participated in the Africa Zone 6 Championships in Namibia in June 2013.
- Diana Welmans was a member of the SA Protea team that participated in the Africa Zone 6 Karate Championships in Namibia in June 2013.
- Elme de Villiers was a member of the SA Badminton team that won gold at the All Africa team event and she played in the semifinals in the singles at the same event. Elme also reached the quarterfinals in the singles and obtained gold in the doubles at the Mauritius Open.
- Sandra le Grange was a member of the SA Badminton team that won gold at the All Africa team event and she obtained a bronze medal in the singles at the same event. Sandra also reached the quarterfinals and obtained gold in the doubles at the Mauritius Open.
- Karla Mostert was a member of the Protea Netball team that participated in the Fast5 World Series in Auckland, New Zealand, in November 2012. Karla was a member of the victorious Protea Netball team in the African Cup in Malawi in May 2013 and also toured England as a member of the Protea Netball team in September 2013.
- Balungile Ngcofe was a member of the SA Protea team that participated in the Africa Zone 6 Karate Championships in Namibia in June 2013.
- Jan Petrus van der Merwe was a member of the SA Swimming team that participated in China and Australia during 2013.
- Wayde van Niekerk was a member of the SA Athletics team that participated in the World Athletics Championships in Moscow, Russia, in 2013.
- Wim Boshoff was a member of the SA Protea team that participated in the Africa Zone 6 Karate Championships.
- Tanya Basson was a member of the SA Judo team that competed in the World Kata Championships in Italy in 2013. Tanya was a member of the SA team to compete in the Africa Championships in Maputo in 2013 and she also competed in the World Kata Championships in Japan.
Sport stars that represented South Africa on junior level, are:
- Danelle Willemse was a member of the SA U/21 Netball team that participated in the Netball Junior World Cup in Glasgow in 2013. She also represented the SA U/21 Netball team in the World Youth Championships in Singapore in 2013.
- Diana Welmans was a member of the SA Protea team that participated in the Africa Zone 6 Karate Championships in Namibia in June 2013. She also participated as a member of the SA U/21 team in the UFAK Africa Karate Championships in Tunisia in August 2013 where she received a bronze medal.
- Line Malan was a member of the SA U/21 Hockey team that participated in the Hockey Junior World Cup in August 2013. She was also a member of the SA U/21 team that toured Europe in July 2013.
- Nicole Walraven was a member of the SA U/21 Hockey team that participated in the Hockey Junior World Cup in August 2013. She was also a member of the SA U/21 Hockey team that toured Europe in July 2013. The SA U/21 team, of which Nicole was a member, won the Africa Cup Tournament in order to qualify for the Junior World Cup.
- Cornelle Botha was a member of the SA U/21 Hockey team that toured Europe in July 2013. The SA U/21 team, of which Cornelle was a member, won the Africa Cup Tournament in order to qualify for the Junior World Cup.
- Lisa Hawker was a member of the SA U/21 Hockey team that won the Africa Cup Tournament.
- Izelle Lategan was not only a member of the SA U/21 Hockey team that participated in the Hockey Junior World Cup in August 2013, but also captained the team. She also captained the SA U/21 Hockey team that toured Europe in July 2013 and won the Africa Cup Tournament in order to qualify for the Junior World Cup. Izelle’s outstanding performances was recognised by SAHA when she was announced as the SA Junior Hockey Player. She was also a member of the SA Senior Women’s Protea team that participated in the World Series Hockey League.
- Tanya Brits was a member of the SA U/21 Hockey team that participated in the Hockey Junior World Cup in August 2013. She was also a member of the SA U/21 Hockey team that toured Europe in July 2013 and won the Africa Cup Tournament in order to qualify for the Junior World Cup. Tanya was also a member of the SA Senior Women’s Protea team that participated in the World Series Hockey League.
- Jacques du Toit was a member of the SA U/21 Rugby team that participated in the IRB Junior World Championships in 2013.
- Andries Gous played as a SA U/19 Cricket player in a test series against England in January and February 2013, as well as in the One-Day Series against England during February and March 2013.
- Wim Boshoff participated as a member of the SA U/21 team in the UFAK Africa Karate Championships in Tunisia in August 2013 where he received a bronze medal. He also participated in the Istanbul Open in Turkey in September 2013.
The KovsieSport club sport stars are:
- Maryka Holtzhausen – Netball
- Jaco Fourie – Hockey
- Izelle Lategan – Hockey
- Leonard Killeen – Cricket
- Teboho (Oupa) Mohoje – Rugby
- Duke Munro – Tennis
- Christi Potgieter – Tennis
- Ricco Sutil – Soccer
- Choaro Khumisi – Soccer
- Wayde van Niekerk – Athletics
- Danelle Prinsloo - Athletics
B Category:
- Jan Petrus van der Merwe – Aquatics
- Elsabe le Roux – Karate
- Tanya Basson– Judo
The USSA international participants were:
- Wayde van Niekerk participated in the World Student Athletic Games in Russia in July 2013.
- Gideon Trotter participated in the World Student Athletic Games in Russia in July 2013.
- Rynhardt van Rensburg participated in the World Student Athletic Games in Russia in July 2013.
- Dumisane Hlaselo participated in the World Student Athletic Games in Russia in July 2013.
- Jaco Fourie participated in the World Student Hockey Games in Russia in July 2013.
- Luke Sanan participated in the World Student Hockey Games in Russia in July 2013.
- Robbie van Schalkwyk participated in the World Student Rugby Games in Russia in July 2013.
- Elme de Villiers participated in the Student World Badminton Championships in Korea in November 2012.
- Sandra le Grange participated in the Student World Badminton Championships in Korea in November 2012.