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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

Twee broers lewer intreerede
2004-06-10

‘n Unieke geleentheid sal homself môre, 9 Junie 2004, voordoen wanneer twee broers - proff Francois en Janse Tolmie - tydens dieselfde geleentheid hul intreeredes aan die Universiteit van die Vrystaat (UV) sal lewer.

Prof Francois Tolmie is verbonde aan die UV se Departement Nuwe Testament en die onderwerp van sy lesing is Die impak van die metodologie op die verstaan van die Nuwe Testament. Prof Janse Tolmie, sy jonger broer, is verbonde aan die UV se Departement Rekenaarwetenskap en Informatika en die onderwerp van sy lesing is Die rol van inligtingstegnologie in kennisbestuur.

Hoewel die studievelde vér verwyderd staan, klop die twee broers se missies wat betref die terugploeg van die verworwe vakkennis ten bate van die gemeenskap. Prof Francois Tolmie is nóú betrokke by dowes en Prof Janse Tolmie tap weer kunsmatige intelligensie ten bate van die mediese wetenskap en geestesgesondheid.

Prof Francois Tolmie verwerf die grade BA, BA Honneurs (Grieks), MA (Grieks), B Th en M Th almal cum laude aan die UV. In 1992 verwerf hy 'n D Th (Nuwe Testament) en in 2004 'n Ph D (Grieks) aan dieselfde universiteit. Na sy militêre diens as kapelaan in Walvisbaai aanvaar hy 'n beroep na die NG-gemeente Walvisbaai. Hy begin sy akademiese loopbaan op 1 April 1990 as senior lektor in die Departement Nuwe Testament en word in 1999 tot medeprofessor en in 2003 tot professor bevorder.

Sy navorsingspesialiteit is die Johannesevangelie en die Brief aan die Galasiërs. Hy is tesourier van die Nuwe Testamentiese Werksgemeenskap van Suid-Afrika, lid van die Society of Biblical Literature en die Studiorum Novi Testamenti Societas, redakteur van Acta Theologica en assistent-redakteur van Neotestamentica. Hy het reeds 34 artikels in geakkrediteerde tydskrifte gepubliseer, asook drie populêr-wetenskaplike boeke en talle bydraes in populêr-wetenskaplike boeke. Hy het twee akademiese boeke in die buiteland gepubliseer - onderskeidelik in Nederland en in die VSA. Later vanjaar verskyn 'n derde akademiese boek in Duitsland. Hy is ook een van die vertalers van die Afrikaanse Bybel vir Dowes.

Prof Janse Tolmie verwerf die grade B Sc, B Sc (Hons) en M Sc (Cum Laude) in Rekenaarwetenskap aan die UV.

Hy is vanaf 1989 betrokke by die UV en was ook ’n dosent aan die Militêre Akademie in Saldanhabaai in 1990/91 en het klas gegee by DePaul Universiteit in Chicago in 2002.

In 1992 is hy vir ses maande gesekondeer na ’n patologiese firma, Van Drimmelen en Vennote, in Johannesburg vir die ontwikkeling van kennisgebaseerde sagteware. Met hierdie projek word hy een van slegs ’n handjievol navorsers in die wêreld wat daarin kon slaag om ’n mediese kundigheidstelsel te ontwikkel wat werklik gebruik word.

Hy verwerf sy Ph D in 1994 en in 1994/95 doen hy navorsing aan die Besigheidskool van Carleton Universiteit in Ottawa, Kanada. Hy word in 1997 bevorder tot mede-professor en in 2003 tot volprofessor. Vanaf 2003 tree hy op as departementele voorsitter van die UV se Departement Rekenaarwetenskap en Informatika.

Hy het meer as 30 publikasies al die lig laat sien, insluitend verskeie internasionale kongresbydraes en artikels in geakkrediteerde joernale. Hy was ook vir 2 siklusse geëvalueer by die NRF. Sy portfolio sluit in die ontwikkeling van sagteware of prototipes vir groot maatskappye soos Van Drimmelen en Vennote en Bayer Diagnostics (VSA). Sy privaatbesigheid fokus op die ontwikkeling van nismarksagteware vir tersiêre instellings. Die sagteware word tans gebruik deur afdelings aan verskeie universiteite in Suid-Afrika.

Die geleentheid vind om 19:00 in die CR Swart-ouditorium op die kampus plaas.

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Tel: (051) 401-2584
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