Two-Pot Retirement System

The Two-Pot Retirement System is a new structure for managing retirement savings in South Africa, effective from 1 September 2024. It divides your retirement savings into three distinct parts: the Savings Pot, the Retirement Pot, and the Vested Pot, each with specific rules for contributions and access.

The system was introduced to provide a balance between accessibility and the preservation of retirement savings. It aims to reduce premature withdrawals and the associated penalties, ensuring that individuals have funds available for emergencies while preserving the majority of their savings for retirement.

The savings pot provides access to funds for emergencies and short-term needs:

• Initial Allocation: 10% of your existing retirement savings (capped at R30 000) will be transferred to this pot after 1 September 2024, which you can only withdraw once ever.
• Ongoing Contributions: One-third of your monthly retirement contributions from the 1 September 2024 will automatically go into this pot.
• Accessibility: You can withdraw from this pot once every tax year before retirement (minimum withdrawal of R2 000), subject to certain conditions and taxed at your marginal tax rate.
  
  *Your own tax liability will influence the calculation. Satrix will act on the directive from SARS for the total tax amount to withhold as part of your savings pot withdrawal.

When you retire, the funds in your savings pot will be included in the lump sum retirement benefit calculation. You can access these funds at retirement, and they will be taxed according to the retirement fund benefits lump sum tax tables applicable at the time of retirement.

The retirement pot secures long-term savings for your retirement years:

• Initial Allocation: Starts with a zero balance and grows with your monthly contributions.
• Ongoing Contributions: From 1 September 2024, two-thirds of your monthly retirement contributions will go into this pot.
• Accessibility: Funds in this pot are locked in until retirement (i.e. you cannot withdraw from this pot until you retire), ensuring long-term financial stability. This pot is taxed according to existing retirement fund rules upon retirement.

When you retire, the funds in your retirement pot will be used to provide an annuity (regular income) in your retirement years. The exact amount and frequency of the income will depend on the type of annuity you choose and the total amount in your retirement pot. These funds are taxed according to the existing retirement fund rules applicable at the time of retirement.

The 'vested pot' refers to all accumulated savings before 1 September 2024:

• Accessibility: Subject to existing withdrawal rules that were in place before the new system.
• Protection: These savings are protected and integrated into the new structure without changing the rules.

When you retire, the funds in your Vested Pot are accessible according to the existing rules that applied before the introduction of the 2-Pot system. You can take up to one-third as a lump sum cash payout, with the remaining two-thirds needing to be annuitised. The tax treatment of these funds will follow the rules that were in place prior to 1 September 2024, ensuring continuity and protection of your pre-existing savings.

Let's use an example to illustrate how this will work.
If your Retirement Annuity (RA) is valued at R600 000 on 31 August 2024:

• Savings Pot: Up to 10% of your existing RA value, capped at R30 000.
• Retirement Pot: R0 initially, but it will grow with your contributions.
• Vested Pot: R570 000 (the remaining balance of your RA).

Let's say you contribute R3 000 monthly to your RA:

• Savings Pot Contribution: R1 000 (one-third of R3 000).
• Retirement Pot Contribution: R2 000 (two-thirds of R3 000).

The way you fund and manage your Retirement Plan portfolio on SatrixNOW won't change. You will continue to deposit and invest your money as you normally would, and we will apportion your funds accordingly amongst the pots.

You will be taxed at your own marginal tax rate. Your own tax liability will affect the calculation, but it is important to note that these withdrawals count as income. Depending on your situation, the withdrawal could push you into a higher tax bracket, potentially resulting in greater-than-expected deductions. Consider discussing this with a registered tax practitioner beforehand to avoid any unexpected surprises.

 * Satrix will act on the directive from SARS for the total tax amount to withhold as part of your savings pot withdrawal. As per the directive we receive from SARS, if you have any outstanding tax obligations, this will first be deducted from your savings pot withdrawal and paid across to SARS on your behalf. 

When you leave your employer:

• Savings Pot: You can access these funds, subject to certain conditions and tax deductions.
• Retirement Pot: Funds remain inaccessible and preserved for retirement (i.e. you cannot withdraw from this pot), but can be transferred to a new retirement annuity or pension fund provider. (See below for more information on how to transfer to SatrixNOW)
• Vested Pot: Funds can be transferred to a new retirement fund, following existing rules.

Yes, certain individuals and retirement products are exempt:

• Already Retired Individuals: Those retired as of 1 September 2024 will follow the old system's rules.
• Provident Fund Members as of 1 March 2021 who were over the age of 55 at the time, and are still part of the fund on 1 September 2024: You can continue under the old rules or choose to opt-in to the new system.

While your current provider may levy fees for the transfer, SatrixNOW does not charge you to transfer your current portfolio to a Satrix retirement plan.
Transferring to SatrixNOW is a simple process involving a few easy steps:

• Activate your Satrix Retirement Plan. You can do this by navigating to your profile menu on the top right of your screen or app and selecting "Account Management" and selecting "Activate New Accounts".
• Accept the T&Cs.

1. First, go to the portfolio overview of your Satrix Retirement Plan, where you’ll be able to see the available balance of your savings pot in the “Your Funds to Invest” section.
2. Just underneath your “Savings Pot Available Balance”, select “Withdraw Money”.
3. On the “Withdraw” page, you’ll be shown two sets of balances:
   • The “Savings Pot Available Balance” will let you know the total value accessible to you.
   • “Uninvested Funds” will let you know the balance that is immediately available for you to withdraw (i.e. uninvested and sitting as free cash)
4. If you would like to withdraw more than the amount displayed as “Uninvested Funds”, you must first sell out of positions to the value you wish to withdraw.
5. Once you have sold out of your investments, repeat steps 1 and 2, then specify your desired withdrawal amount in the space provided.
6. If your tax details have not been captured on your profile, provide your tax number under “Your Tax Details”.
7. Under the “Transaction Summary”, you’re given the option of selecting your income bracket if you would like to have an estimate of how much tax you will pay, and how much you will receive after tax has been deducted (* Please note this is just an estimate: SARS will provide us with a tax directive to specify the amount we will be required to pay over to them before we can release your funds to your bank account.)
8. Confirm your banking details are correct and click “Withdraw”.
9. After the directive from SARS has been received, the fund will be paid into your Satrix Account

Important Information:

• Withdrawals from your savings pot cannot be cancelled or reversed once you’ve submitted your request, so please be 100% sure you wish to withdraw before completing your submission.
• As with all other withdrawals, you must have verified banking details (in your name) on your profile.
• You must also ensure your tax details have been captured on your profile.
• We cannot process withdrawals without a directive from SARS, so if your tax details are incorrect on your profile (or you do not provide the correct tax number during your withdrawal request), SARS will decline and not provide us with one. (If you do not have a tax number, you will need to provide a valid reason as to why.)

You will be taxed at your own marginal tax rate. Your own tax liability will affect the calculation, but it is important to note that these withdrawals count as income. Depending on your situation, the withdrawal could push you into a higher tax bracket, potentially resulting in greater-than-expected deductions. Consider discussing this with a registered tax practitioner beforehand to avoid any nasty surprises.

 * Satrix will act on the directive from SARS for the total tax amount to withhold as part of your savings pot withdrawal. As per the directive we receive from SARS, if you have any outstanding tax obligations, this will first be deducted from your savings pot withdrawal and paid across to SARS on your behalf. 

Provided there are no issues with SARS, withdrawals will take 3-5 business days to process. Once we have released your funds, the time it takes for the funds to reflect in your account depends on the receiving bank’s processing times.

You can only withdraw from your savings pot once every tax year. If you’ve already requested a withdrawal during the tax year, the next available withdrawal date will be shown to you next to “Withdraw Money” on your Satrix RA account overview page.