Latest News Archive
Please select Category, Year, and then Month to display items
20 August 2025
|
Story Dr Annelize Oosthuizen
|
Photo Supplied
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.
Names are not enough: a molecular-based information system is the answer
2016-06-03
Prof Wijnand Swart (left) from the Department of
Plant Sciences at the UFS and Prof Pedro Crous
from the Centraalbureau voor Schimmelcultures (CBS),
in the Netherlands.
Photo: Leonie Bolleurs
South Africa is the second-largest exporter of citrus in the world, producing 60% of all citrus grown in the Southern Hemisphere. It exports more than 70 % of its citrus crop to the European Union and USA. Not being able to manage fungal pathogens effectively can have a serious impact on the global trade in not only citrus but also other food and fibre crops, such as bananas, coffee, and cacao.
The Department of Plant Sciences at the University of the Free State (UFS) hosted a public lecture by Prof Pedro W. Crous entitled “Fungal Pathogens Impact Trade in Food and Fibre: The Need to Move Beyond Linnaeus” on the Bloemfontein Campus.
Prof Crous is Director of the world’s largest fungal Biological Resource Centre, the Centraalbureau voor Schimmelcultures (CBS), in the Netherlands. He is also one of the top mycologists in the world.
Since the topic of his lecture was very pertinent to food security and food safety worldwide, it was co-hosted by the Collaborative Consortium for Broadening the Food Base, a multi-institutional research programme managed by Prof Wijnand Swart in the Department of Plant Sciences.
Reconsider the manner in which pathogens are identified
Prof Crous stressed that, because international trade in products from agricultural crops will expand, the introduction of fungal pathogens to new regions will increase. “There is therefore an urgent need to reconsider the manner in which these pathogens are identified and treated,” he said.
According to Prof Crous, the older Linnaean system for naming living organisms cannot deal with future trade-related challenges involving pests and pathogens. A system, able to identify fungi based on their DNA and genetic coding, will equip scientists with the knowledge to know what they are dealing with, and whether it is a friendly or harmful fungus.
The fungus, Botrytis cinerea, cause of grey mould
disease in many fruit crops.
Photo: Prof Wijnand Swart
Embrace the molecular-based information system
Prof Crous said that, as a consequence, scientists must embrace new technologies, such as the molecular-based information system for fungi, in order to provide the required knowledge.
He presented this very exciting system which will govern the manner in which fungal pathogens linked to world trade are described. This system ensures that people from different countries will know with which pathogen they are dealing. Further, it will assist with the management of pathogens, ensuring that harmful pathogens do not spread from one country to another.
More about Prof Pedro Crous
Prof Crous is an Affiliated Professor at six international universities, including the UFS, where he is associated with the Department of Plant Sciences. He has initiated several major activities to facilitate global research on fungal biodiversity, and has published more than 600 scientific papers, many in high impact journals, and authored or edited more than 20 books.
Biography Prof Pedro Crous
Philosophical Transactions of the Royal Society B