A 2 pot system withdrawal comes from the savings component of your retirement fund only. The minimum is R2 000, you can make one withdrawal per tax year, and the amount is taxed at your marginal rate. You apply to your own fund, and SARS must issue a tax directive before the fund pays you.
The two-pot system started on 1 September 2024. Nothing here replaces your fund’s own rules, so check them with your administrator and with SARS before you apply.
Eligibility Requirements at a Glance
- Fund type: the two-pot system generally applies to pension, provident, preservation and retirement annuity funds.
- Minimum amount: at least R2 000 per withdrawal, up to the balance in your savings component. There is no other maximum.
- Frequency: one withdrawal per tax year. The individual tax year runs from 1 March to the end of February; for 2027 it is 1 March 2026 to 28 February 2027.
- Tax registration: you must be registered for income tax and have a tax reference number.
- Tax returns: SARS will not issue a tax directive if you have outstanding returns.
According to National Treasury, the system does not cover legacy retirement annuities, funds with no active members, pensioners, and provident fund members who were 55 or older on 1 March 2021 and have not opted in. Those provident fund members can elect to join through their fund, but the decision cannot be reversed.
Your savings component was seeded with 10% of your fund value at 31 August 2024, capped at R30 000, as a once-off transfer. Since 1 September 2024, one-third of your contributions goes to the savings component and two-thirds to the retirement component.
Identification and Account Requirements
Tax reference number. A tax directive will not be granted without a valid tax reference number, so register for income tax before you ask your fund to pay out. You do not need to visit a SARS office.
Your fund membership. You deal with your own retirement fund or its administrator, which holds your savings component balance and your banking details. There is no central application: members apply to or enquire from their fund directly.
Leaving your employer. If you resign, you can still access what is in the savings component, but the retirement component is not accessible on resignation. If you leave a fund before retirement, the retirement component cannot be taken as a lump sum and must be transferred to another fund. If you move from one occupational fund to another, all three pots go to the new fund.
Documents and Verification Required
The two-pot rules do not set a national document list. Each fund sets its own claim form and supporting documents, so ask your administrator what it needs. Expect to give at least your tax reference number and your identity and banking details.
Verification has two stages. The fund checks your claim, then applies to SARS for a tax directive. SARS has enhanced its tax directive application for gratuities and two-pot savings withdrawal benefits (the IRP3(a) process) to allow for this. If you have outstanding returns, SARS will not issue the directive.
Fees, Limits and Service Conditions
- Limits: minimum R2 000, one withdrawal per tax year, no maximum other than your savings component balance.
- Tax: withdrawals are taxed at your marginal rate. SARS adds the benefit to the annual payment calculation, and no retirement rates, deductions, exemptions or tax-free amounts are used.
- SARS debt: tax debt you owe SARS is deducted from the payout first. A formal payment arrangement stops debt deductions, but arrears are still deducted.
- Administration fees: your fund charges fees under its own rules on each savings withdrawal, and administrators must tell you what the fee is. Ask for the amount before you apply.
Once your fund has sent the directive application to SARS, your decision to withdraw is final and cannot be cancelled.
The vested component is separate. It stays under the rules that applied before the system started, and the FSCA says it can still be accessed on resignation or retrenchment. At retirement, one-third of the vested and savings amounts may be taken in cash and two-thirds must buy an annuity, unless the total is R165 000 or less.
How to Apply, Open or Activate
Apply through your own retirement fund or its administrator. Whether your fund offers an online portal, an app or a paper form differs from fund to fund, so ask your administrator.
- Check that you are registered for income tax and have no outstanding returns.
- Find out who administers your fund. Your employer or your benefit statement will tell you.
- Use the illustrative payout calculator that SARS offers to estimate what you will receive after tax.
- Ask the fund for its claim process and its fee, then submit your claim with the documents it asks for.
- The fund applies to SARS for the tax directive and pays you once it is issued.
Frequently Asked Questions
How much can I withdraw under the 2 pot system?
At least R2 000 per withdrawal, up to the balance in your savings component, and only once per tax year.
Is a 2 pot system withdrawal taxed?
Yes. It is taxed at your marginal rate, and the fund also charges an administration fee under its own rules.
Do I have to resign to make a withdrawal?
No. The savings component can be accessed at any time, subject to the minimum and the once-a-year limit. If you do resign, the savings component stays accessible but the retirement component does not.
Can I cancel my withdrawal?
Not once your fund has sent the directive application to SARS. Make your decision before you submit.
Can I access the vested component through this withdrawal?
No. The savings withdrawal is taken from the savings component. The vested component is governed by the rules that applied before the system began.
Rules, tax treatment and fund fees can change. Confirm the current position with your retirement fund and with SARS before you apply.
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