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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

Gender bias still rife in African Universities
2007-08-03

 

 At the lecture were, from the left: Prof. Magda Fourie (Vice-Rector: Academic Planning), Prof. Amina Mama (Chair: Gender Studies, University of Cape Town), Prof. Engela Pretorius (Vice-Dean: Humanties) and Prof. Letticia Moja (Dean: Faculty of Health Sciences).
Photo: Stephen Collett

Gender bias still rife in African Universities

Women constitute about 30% of student enrolment in African universities, and only about 6% of African professors are women. This is according to the chairperson of Gender Studies at the University of Cape Town, Prof Amina Mama.

Prof Mama was delivering a lecture on the topic “Rethinking African Universities” as part of Women’s Day celebrations at the University of the Free State (UFS) today.

She says the gender profile suggests that the majority of the women who work in African universities are not academics and researchers, but rather the providers of secretarial, cleaning, catering, student welfare and other administrative and support services.

She said that African universities continue to display profound gender bias in their students and staffing profiles and, more significantly, are deeply inequitable in their institutional and intellectual cultures. She said women find it difficult to succeed at universities as they are imbued with patriarchal values and assumptions that affect all aspects of life and learning.

She said that even though African universities have never excluded women, enrolling them presents only the first hurdle in a much longer process.

“The research evidence suggests that once women have found their way into the universities, then gender differentiations continue to arise and to affect the experience and performance of women students in numerous ways. Even within single institutions disparities manifest across the levels of the hierarchy, within and across faculties and disciplines, within and between academic and administrative roles, across generations, and vary with class and social background, marital status, parental status, and probably many more factors besides these”, she said.

She lamented the fact that there is no field of study free of gender inequalities, particularly at postgraduate levels and in the higher ranks of academics. “Although more women study the arts, social sciences and humanities, few make it to professor and their research and creative output remains less”, she said.

Prof Mama said gender gaps as far as employment of women within African universities is concerned are generally wider than in student enrolment. She said although many women are employed in junior administrative and support capacities, there continues to be gross under-representation of women among senior administrative and academic staff. She said this disparity becomes more pronounced as one moves up the ranks.

“South African universities are ahead, but they are not as radically different as their policy rhetoric might suggest. A decade and a half after the end of apartheid only three of the 23 vice-chancellors in the country are women, and women fill fewer than 30% of the senior positions (Deans, Executive Directors and Deputy Vice-Chancellors)”, she said.

She made an observation that highly qualified women accept administrative positions as opposed to academic work, thus ensuring that men continue to dominate the ranks of those defined as ‘great thinkers’ or ‘accomplished researchers’.

“Perhaps women simply make realistic career choices, opting out of academic competition with male colleagues who they can easily perceive to be systematically advantaged, not only within the institution, but also on the personal and domestic fronts, which still see most African women holding the baby, literally and figuratively”, she said

She also touched on sexual harassment and abuse which she said appears to be a commonplace on African campuses. “In contexts where sexual transactions are a pervasive feature of academic life, women who do succeed are unlikely to be perceived as having done so on the basis of merit or hard work, and may be treated with derision and disbelief”, she said.

She, however, said in spite of broader patterns of gender and class inequality in universities, public higher education remains a main route to career advancement and mobility for women in Africa.

“Women’s constrained access has therefore posed a constraint to their pursuit of more equitable and just modes of political, economic and social development, not to mention freedom from direct oppression”, she said.

Prof Mama concluded by saying, “There is a widely held agreement that there is a need to rethink our universities and to ensure that they are transformed into institutions more compatible with the democratic and social justice agendas that are now leading Africa beyond the legacies of dictatorship, conflict and economic crisis, beyond the deep social divisions and inequalities that have characterised our history”.

She said rethinking universities means asking deeper questions about gender relations within them, and taking concerted and effective action to transform these privileged bastions of higher learning so that they can fulfil their pubic mandate and promise instead of lagging behind our steadily improving laws and policies.

Media Release
Issued by: Mangaliso Radebe
Assistant Director: Media Liaison
Tel: 051 401 2828
Cell: 078 460 3320
E-mail: radebemt.stg@ufs.ac.za  
02 August 2007
 

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