Many South Africans have chosen to access the “Savings Pot” of their retirement fund (up to R30 000 before deductions), and I just hope that the money will be put to good use and not spent recklessly on unnecessary goods.
The reality is that if you are taking R30 000 now – at a standard, current investment growth rate – it would have been worth R71 000 in 10 years’ time, R168 000 in 20 years and R398 000 in 30 years.
So I hope people who are withdrawing their money, make it worth their while. However, it is your money and your choice whether to access the money or not.
It is important to note, that even though the two-pot retirement system came into play on Sunday, this does not mean that the money you want to withdraw is available from that date.
Payouts could take a while, depending on the rules set by each retirement fund.
Only when the seeding calculation is done and the available amount in your “Savings Pot” is confirmed, can retirement fund members start submitting claims. It can even take up to mid-October for fund administrators to know what is in your “Savings Pot”.
No timeline has been given for when the seeding calculations need to be finalised.
Things to do before you apply for a withdrawal from your “Savings Pot”:
- Ensure your tax returns are up to date and any outstanding taxes paid.n Check that your SARS tax status is “compliant”.
- Make sure that your retirement fund is not one of the few that are excluded from the two-pot system.
- See to it that you have at least R2 000 in your “Savings Pot” to withdraw.
- Speak to your Human Resources (HR) department.
- Consult with your financial advisor.
Ask your administrator how you can opt-in should you want to be part of the two-pot system and withdraw from the “Savings Pot” if:
- You have an older retirement annuity.
- You are a member of a provident or provident preservation fund who was 55 years or older on 1 March 2021.
- Are still a member of the same provident fund and you have not opted into the system.
Simple things to ensure:
- Your company and your retirement fund have your correct contact details – including your correct cellphone number, email and physical address.
- Identity details are in order. Eg: Be sure your retirement fund has been informed if you have married and changed your surname.
- Your administrator has the correct name and identity number for you, including having the correct spelling of your name, so that your application is not rejected.
- Banking particulars are 100% correct. Your bank account must be in the same name as your identity document and the name the fund has for you.
- All the details you put on your withdrawal application must be the same as what your retirement fund has on record for you. If not, your fund will not pay out.
- You have a SARS tax number. This is a requirement, even if you earn below the tax threshold and don’t pay tax. HR can help you with this.n You have checked that after Sunday, your “Savings Pot” has more than R2 000 in it.
- That you have not made a withdrawal in this tax year (starting 1 March). If you have, you will not be able to withdraw until the next tax year.
How to check that your tax affairs with SARS are in order:
- Log on to the SARS eFiling website.n Choose Tax Status on the top right-hand menu.
- Select Tax Compliance Status on the menu on the left of the eFiling page.
- If it shows a green button and says “compliant”, then you are good to go.
- If it is red and says “not compliant”, click to see what returns/taxes are outstanding.
SARS arrangements
- If you have outstanding penalties and taxes, make
arrangements with SARS.
- If you have an arrangement in place to pay a certain amount of your arrears each month, then SARS will not take the outstanding tax from your retirement fund withdrawal. If not, SARS will take outstanding monies from your withdrawal.
Fund administrator charges
- Make sure that you know exactly what the mandatory administrator’s charge is going to be on your “Savings Pot” withdrawal.
- When you are happy with the amount you are going get after these charges and SARS payments – submit your
application for a withdrawal.
- Be patient. And don’t commit to spending the money before you have it in your bank account.
* Please note that this does not constitute as financial advice in any way.
Daily Voice