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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

Access to the Bloemfontein Campus
2015-04-02

Access Control Made Easy

The first phase of access control at the University of the Free State (UFS) was implemented in August 2014. The aim of this initiative is to tighten security measures on the Bloemfontein Campus.
 
Since November 2014, access control has been implemented at all five gates on the Bloemfontein Campus. These are:

  • The Main gate in Nelson Mandela Drive (Gate 1)
  • The gate in DF Malherbe Drive (Gate 5)
  • The gate in Wynand Mouton Drive (Gate 3) 
  • The gate in Furstenburg Street (Gate 4)
  • The gate in Badenhorst Street (Gate 2)

Here is some useful information about the access control system:

1. Remember your access card when you enter the campus

Dual-function cards (with distance reader compatibility) will make your movement through the gates more convenient. The university’s access system works automatically with remote or swipe action. Please make sure that you drive close to the reader or, better still, get the dual-frequency card to manage the distance between your vehicle and the remote card reader.

As of 23 March 2015, the extra security staff, who have been assisting at the gates since the implementation of access control on the Bloemfontein Campus, are no longer manning the card readers at the gates. Therefore, persons without cards will be able to enter the campus only at the one gate in DF Malherbe Drive where the Visitors Centre is situated. They will be referred to the Visitors Centre, where a day visitor’s card will be issued to them. You will need to produce a formal identification document (e.g. ID book, driver's licence).

Security will continue their normal duties at the guardhouses for the various gates on the campus.

2. Where do I get an access card?

You can apply at the university’s Visitors Centre front desk by producing your positive identification (ID book/passport/driver’s licence) and proof of payment for your access card.

You will then be directed to the Thakaneng Bridge where you will be able to collect your access card.

  • Go to the Cashier on the Thakaneng Bridge and pay your R65 for the dual-frequency card
  • Take your receipt, together with your existing card (if you have one), to the Card Division on the Thakaneng Bridge (next to Mellins Optometrists)
  • A new photo will be taken of you at the Card Office for your new card. Your new card will then be issued immediately.

Currently, there is a sufficient stock of the dual-frequency cards available at the Card Division on the Thakaneng Bridge.
 
Alternatively, you can apply online for your access card: http://apps.ufs.ac.za/cardapplication/application.aspx

Make sure you have the following documents ready to attach when completing the online form:

  • Copy of positive identification: ID/Driver's Licence/Passport
  • Signed declaration (http://supportservices.ufs.ac.za/dl/Userfiles/Documents/00007/4668_eng.pdf) by your service provider/employer (if you are a service provider) or a letter of confirmation from your spouse/partner/relative/coach/relevant UFS staff member or student in cases where you have to visit, pick-up or drop off your spouse/partner/relative frequently on the UFS Bloemfontein Campus.

Cost: R65 for a long-term card and free of charge for short-term visits and conference delegates. Pay at the Cashier on the Thakaneng Bridge or at Absa Bank, Account Number: 1 570 8500 71, Ref: 1 413 07670 0198.

3. Cutoff Date: 7 April 2015

After 7 April 2015, no pedestrian or motorist will be able to enter the campus without a valid access card. Persons without access cards will have to enter the campus at the gate in DF Malherbe Drive where the Visitors Centre is situated. You will then be referred to the Visitors Centre where you will have to apply for a day visitor’s card. It is important to note that no one will be able to enter the campus at the Visitors Centre without a formal identification document (e.g. ID book, driver's licence).

4. Dual-frequency card simplifies access to the campus

It is important to have your card ready on entering the campus.

This card will simplify access to the campus considerably, as the card reader will read the card when it is held in a vertical position at the driver’s side window in the direction of the distance reader. Please do not place the card on the dashboard. There is an antenna wire in the card. If the card is placed on the dashboard, you are not exposing the card surface to the reader, and that might influence the antenna’s response to the reader.

Remember, the distance between the reader and the boom is only a few metres.  If you approach the reader at a ’high’ speed, you are not allowing the system to identify your card, match it to the entry in the database, check if you are ‘legal’, and then send a signal to open the boom. 

All five gates are equipped with distance readers. Within the next three weeks, two extra distance readers will also be installed at the Main Gate in Nelson Mandela Drive.
 
Please note that the dual-frequency card is needed only when you enter the campus with a vehicle and you want to activate the distance reader. All the older cards will continue to work at the tag readers. 

5. Use alternative gates

At times, some of the gates carry more traffic than others, especially with the peak morning and afternoon traffic. Gates with less traffic include:

  • The gate in Badenhorst Street
  • The gate in DF Malherbe Drive
  • The gate in Nelson Mandela Drive

You are welcome to make use of one of these alternative gates.

6. Pedestrians

No pedestrian will be able to enter the Bloemfontein Campus without a valid access card. If you have left your card at home or have lost it, you should enter the campus at the gate in DF Malherbe Drive where the Visitors Centre is situated. You will be referred to the Visitors Centre where you can apply for a day visitor’s card. You will still need to produce a formal identification document (e.g. ID book, driver's licence).

7. More information

Email: visitorscentre@ufs.ac.za
Visitors Centre front desk: Tel: +27 51 401 7766 (Mondays-Fridays 07:45-16:30)
Card Division: Tel: +27 51 401 2799 (Mondays-Fridays 07:45-16:30)
Protection Services duty room: +27 51 401 2634 (24 hours)

 

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