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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

Three receive PhD degrees in Architecture at Winter Graduation ceremony
2015-07-08

Dr Hendrik Auret, Dr Gerhard Bosman and Dr Madelein Stoffberg.
Photo: Leonie Bolleurs

Three graduates from the University of the Free State’s (UFS) Department of Architecture received their PhD degrees at the 2015 Winter Graduation ceremony on the Bloemfontein Campus. According to Prof Walter Peters from Architecture, this is the first time in the history of the UFS that three PhD degrees in Architecture have been awarded simultaneously. It is country-wide a rare occurrence for three PhDs to be awarded in Architecture at one graduation ceremony.

“Previously, the UFS has only ever awarded a single PhD in Architecture, and that was in 1987, to Leon Roodt, a former head of the department. The first UFS honorary doctorate in Architecture was conferred on Gerard Moerdijk, architect of the Afrikaner church and the Voortrekker Monument. Gawie Fagan and Prof Bannie Britz, late head of the Department of Architecture, were other recipients of an honorary doctorate in Architecture,” said Prof Peters.

At the 2015 Winter Graduation ceremony, the UFS conferred PhDs in Architecture on Hendrik Auret from Roodt Architects in Bloemfontein as well as on Gerhard Bosman, and Madelein Stoffberg from the UFS Department of Architecture.

Dr Hendrik Auret

As an Architecture student at the university, Dr Auret obtained the degree BArchStud in 2004, a BArchStud (Hons) in 2005, and a March (Prof) in 2006, all cum laude. His Master’s design dissertation was judged the best from all South African Architecture learning sites, earning him the coveted ‘Corobrik Architectural Student of the Year’ award.

The work of the Norwegian architect and theorist, Christian Norberg-Schulz, served as the basis of Dr Auret’s PhD thesis, Care, place and architecture: a critical reading of Christian Norberg-Schulz’s architectural interpretation of Martin Heidegger’s philosophy, which considered the cogency of Norberg-Schulz’s architectural ‘translation’ of the German philosopher Heidegger’s thinking.

Dr Gerhard Bosman

On obtaining his BArchStud. and BArch degrees at the university in 1993 and 1995 respectively, Dr Bosman immediately joined the part-time staff of the Department of Architecture. As a lecturer in Building Construction, he developed an interest in vernacular and indigenous methods and techniques. Consequently, he built the first family home in Bloemfontein, for his wife, Debbie, and their two children, of earth construction, which been previously but erroneously considered inferior.

Despite that negative perception, Dr Bosman persuade the university to allow him to undertake post-graduate studies at the International Center for Earth Architecture (CRATerre-ENSAG) within the Ecole d' Architecture de Grenoble, France, from which institution,he was awarded the DPEA-Architecture de Terre qualification in 2000. In 2001,Dr Bosman was appointed to the full-time staff.

In 2003, when the opportunity arose, he became involved with SANPAD, the South Africa-Netherlands Research Project on Alternatives in Development, which lead ultimately to his PhD thesis: The acceptability of earth-constructed houses in central areas of South Africa.

Dr Madelein Stoffberg

In 2005, Dr Stoffberg enrolled as an Architecture student at the UFS, obtaining her BArchStud degree in 2007, the BArchStud (Hons) in 2008 and the March (Prof) in 2009, the latter cum laude. Immediately on graduating, Dr Stoffberg was appointed to her position as a part-time junior lecturer in the Department of Architecture.

During her studies, her attention was drawn to the concept of the spatial triad of Henri Lefebvre. Fascinated with the conceptand by the development of community centres as a contemporary architectural typology, she began her PhD degree.  

Entitled Lived reality, perception and architecture: two community centres interrogated through the lens of Lefebvre’s spatial triad, Dr Stoffberg investigated the relationship between the spatial understanding of the project architect and the community of two completed buildings in Port Elizabeth. She established a mismatch in perception, representation, and use of space, which could be bridged, however, by way of a qualitative research approach, instead of a quantitative one.


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