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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

Dr Karen Lazenby appointed as Registrar: Systems and Administration
2015-11-11


Dr Karen Lazenby, Registrar: Systems and Administration

Dr Karen Lazenby, former Director: Client Service Centre at the University of Pretoria (UP), was appointed as Registrar: Systems and Administration at the University of the Free State (UFS) as from 1 November 2015. She will be responsible for student enrolment, administration and services, and International Affairs.

“We are extremely fortunate to have a person of the calibre and experience of Dr Lazenby to join the senior team to help us create a 21st century student-centred management system using the best technologies available. She is without question the leader in her field, and the UFS is delighted to have her as part of the Kovsie community,” says Prof Jonathan Jansen, Vice-Chancellor and Rector of the UFS.

Educational background

Dr Lazenby completed the BA (1992) and Honours (1993) degrees in English (cum laude) at the University of Potchefstroom before pursuing a Diploma in Tertiary Education (1996) and a Master's Degree in Computer Integrated Education (1998) at the University of Pretoria. She obtained a PhD in Education in 2003 on the topic ‘Technology and educational innovation: A case study of the virtual campus of the University of Pretoria’ and an Executive MBA from the University of Cape Town in 2006.

A track record to reckon with


Dr Lazenby started her career in higher education as a lecturer in Communication at the VaalTriangle Technikon in 1994, and was appointed as Head of Academic Staff Development the following year.  A year later, she joined Technikon SA as instructional designer at the Centre for Courseware Design and Development, and in 1997 she was appointed as Manager of Institutional Research. She was subsequently seconded to establish TSA Online and coordinate institutional technology. Dr Lazenby was appointed as a project manager at the department of Education Innovation at the University of Pretoria in 1998 where she implemented WebCT/Blackboard, online applications and payments, and student and lecturer portals (virtual campus). In 2000 she was appointed as Deputy Director: Electronic Education.

She was seconded by the UP Executive to establish the Client Service Centre in 2001 to provide integrated, efficient and effective services to students and other clients of the University. During her time as Director: Client Service Centre, she was inter alia, responsible for information and data governance, the intranet, website and call centre of the university, student recruitment, publications, application for study support, study finance, postgraduate scholarships, student accounts, payments, residence placement, access cards and parking, the graduate career office, and international student division. In 2005, she also acted as Director: Corporate Communication and Marketing.

Her vision for the UFS

“I would like to get the university's student administration to such a point that academic staff can focus on teaching and research. Streamlining the enrolment process so that we may see the necessary yield required in terms of our growth target as a university, is my other goal.” She added that capitalising on the strong international positioning of the UFS achieved by Prof Jansen, is a mission she intends to carry out. "I am grateful for the opportunity to work with Prof Jansen and the senior management team and am delighted to be part of the Kovsie community."

Dr Lazenby has published several articles and presented nineteen papers at international conferences.


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