The two-component system became effective on 1 September 2024, consisting of the following components:
Vesting component
- Starts with the balance of retirement fund savings on 31 August 2024.
- Members will not be able to make contributions to their Vested Component (unless older than 55 on 1 March 2021).
- Seed capital, calculated as the lower of 10% of the Vested Component, or R30 000, is transferred from the Vested Component to the Savings Component.
- Lump sums are taxed per either the current Withdrawal or Retirement tables.
- Annuities taxed at marginal income tax rates.
Savings component
- Seeding finance for Savings Component (maximum R30 000).
- An amount of one-third of the retirement fund contributions post 31 August 2024 goes to the Savings Component.
- It can be accessed without any conditions, but only one withdrawal can be made during any 12-month period The minimum withdrawal amount is R2 000.
- Withdrawals are taxed at the marginal income tax rates.
Retirement component
- Individuals will be required to contribute an amount of two-thirds of the retirement fund contributions post 31 August 2024 to the Retirement Component”.
- Cannot be accessed before the retirement date.
- On retirement date, the total value must be paid in the form of an annuity (including a living annuity).
- Annuities taxed at marginal income tax rates.
Retirement Fund Lump Sum Benefits
Retirement fund lump sum withdrawal benefits
- tax determined by applying the tax table to the aggregate of that lump sum plus all other retirement fund lump sum withdrawal benefits accruing from March 2009 and all retirement fund lump sum benefits accruing from October 2007 plus severance benefits accrued from March 2011, less
- tax determined by applying the tax table to the aggregate of benefits mentioned above excluding lump sums withdrawals received for the year
Retirement fund lump sum benefits or severance benefits
- tax determined by applying the tax table to the aggregate of that lump sum plus all other retirement fund lump sum benefits accruing from October 2007 and all retirement fund lump sum withdrawal benefits accruing from March 2009 plus severance benefits accrued from March 2011, less
- tax determined by applying the tax table to the aggregate of benefits mentioned above excluding retirement lump sums and severance benefits received for the year