Moneyweb reports that according to a survey by personal finance platform JustMoney, many retirement fund members who opted to withdraw money from their savings components under the new two-pot retirement system were taken aback by the tax implications.

The survey participants felt the taxes imposed were “unfair” as the SA Revenue Service (Sars) “took it all”. Despite extensive awareness campaigns in the media and via retirement funds, a substantial number of members seemed to not fully grasp the extent of the tax they would pay on their withdrawals. Before the implementation of the two-pot system on 1 September 2024, fund members were warned that accessing funds from the savings pot would be “a costly way” to get money, as withdrawals were taxed at a significantly higher marginal tax rate. There is a large difference between the marginal tax rate applicable to two-pot retirements and the tax rate applicable to early withdrawals of retirement funds under the previous regime. Meantime, tax collections as a result of the two-pot system will certainly exceed previous estimates of R5 billion. Over and above this windfall, Sars also collected outstanding tax money from two-pot claimants, meaning that in some instances fund members ended up with very little or nothing after putting in withdrawal requests. Almost eight of every 10 South Africans who participated in the JustMoney survey said they withdrew money from their savings components to repay debt. The survey results painted a picture of distressed consumers, with 24% having rated their financial health as “poor”, 43% as “average” and only 11% as “excellent”.

• Read the full original of the report in the above regard by Liesl Peyper at Moneyweb

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