How will the Two-Pot system work?

All retirement savings as at 1 September 2024 will not be affected and remain in your vested component.

Your vested component will provide initial capital for your savings component of 10% of the value in your retirement account on 31 August 2024, capped at R30,000.

This will assist members who require an immediate withdrawal due to a financial emergency. This seeding will be a once-off event, and if not used, it will remain available for future emergencies.

Contributions received from the 1st of September 2024 will be split between a retirement pot and a savings pot. Up to one-third of contributions will be split into the savings component and the remainder will flow into the retirement component.

The details below serve as a quick reference guide, providing a clear overview of how your retirement savings will be structured under the new system:

savings pot

Vested Pot

All funds saved in your retirement account prior to 1 September 2024 will form part of your vested component, which will also grow by investment returns.

No future contributions are allowed into the vested component.

Before retirement:100% withdrawal on termination of employment

At retirement:The same rules that apply currently at retirement.

savings pot

Savings Pot

After 1 September 2024: One-third of your contributions will go to your savings component, including future investment growth.

Your vested component will provide initial capital for your savings component of 10% of the value in your retirement account on 31 August 2024, capped at R30,000.

Before retirement: One withdrawal allowed per tax year. Minimum withdrawal amount of R2,000 up to a 100% of the amount in this component. Withdrawals are taxed as gross income at your marginal tax rate.

At retirement: 100% withdrawal taxed at the retirement tax tables with the first R550,000 of your retirement withdrawalbeing untaxed.

savings pot

Retirement Pot

All funds saved in your retirement account prior to 1 September 2024 will form part of your vested component, which will also grow by investment returns.

No future contributions are allowed into the vested component.

Before retirement: Inaccessible and preserved until retirement

At retirement: These funds must be used to purchase an annuity unless the value is below the prescribed amount (currentlyR165,000).

What will be deducted from the savings component when withdrawing?

Every withdrawal from the savings component will carry an admin fee of R260

The admin fee will be deducted from the amount that you withdraw from the savings component. This will be applicable to every withdrawal form received.

Take note! Only one withdrawal is allowed per tax year (1st March – 28 February)

In the event of members submitting more than one withdrawal request in a tax year, the additional request will be declined and the member will still be charged the admin fee.

Tax (Based on your income tax percentage)

Each withdrawal will be taxed in accordance with the applicable tax margin for each member. Withdrawals can push your income into a higher tax bracket that will result in higher taxes in the applicable tax year.

Arrear tax (IT88) will be taken by SARS

Should you have any arrear tax payments due to SARS, it will be deducted from the savings component payable to you. It is therefore very important to take into consideration that you may not receive the full benefit you were expecting.

What is the Claim Process?

All withdrawals must be made via the CRF App or Member Portal via the website. Members will be able to electronically complete their applications and attach the required supporting documentation. Watch the video below for more information on the withdrawal process.

 

Make an Informed Decision!

Once the claim process has started and a tax directive has been issued for the withdrawal of your savings component, neither your decision nor the tax directive can be reversed. In other words, if you only find out after the application that you won’t be receiving a payment due to the required deductions as mentioned above – the process can’t be reversed.

It is important to remember that the goal is still to preserve your retirement savings for as long as possible as the amounts grow at compound rates. If you make a withdrawal from your savings component, you do not just lose the tax-free portion of the benefit at retirement, but also the accumulated returns on the amounts withdrawn annually, which could have an impact on your retirement benefit.

We are here to assist you every step of the way to ensure you make the best possible decision when it come to your retirement well-being. Remember, you can always consult with the Fund’s appointed financial advisors, Portfolium, to help guide you and ensure that you retire financially independent and secure.

Should you need more information or any assistance relating to your retirement goal, please don’t hesitate to contact our communication team on 0861 CRFund (0861 273863).

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