Michelle Acton, retirement reform executive at Old Mutual Corporate, told a media roundtable this week that despite efforts by the financial services industry and media to educate the public, “much more work” needed to be done to improve public understanding of the two-pot retirement system.

“Only 52% of those surveyed in the OMSI Monitor this year knew how much they had in their current retirement savings. And a number of consumers, including one financial adviser, were under the impression that they would be able to withdraw a third of their retirement savings on 1 September,” she said.

This is an incorrect assumption. On 1 September, your savings pot will have zero funds. To address the fact that many may want to make withdrawals immediately, there will be “seed funding”. The seed funding will be 10% of your retirement savings, up to a maximum of R30,000. This money will come out of your vested pot.

The minimum withdrawal is R2,000, so if you have less than R20,000 in your retirement savings, you will not be able to make any withdrawals. The money is also unlikely to be available immediately because retirement fund administrators are likely to be facing a quantum of withdrawal requests never seen before.

The R30,000 maximum withdrawal (depending on how much you have saved currently) is also a once-off maximum. From 1 September 2025, you can make one withdrawal from your savings pot each year. The minimum withdrawal will be R2,000 and the maximum will be whatever the amount in your savings pot is. For example, if you were saving R3,000 a month towards your retirement, R2,000 would go towards your retirement pot and R1,000 would go to your savings pot. After one year, you would have R12,000 in your savings pot and you could choose to withdraw the entire R12,000 plus the returns you would have earned on that money in 12 months.

Acton says while a huge focus seems to be on members being able to draw down from their retirement savings once a year, the forced preservation of the savings in the “retirement” pot is a positive development.

“Members will have access to their savings pot once per tax year, provided the withdrawal amount is at least R2,000. This provision ensures that funds are available for emergencies without encouraging frequent withdrawals. Additionally, withdrawals from the savings pot will be taxed at the individual’s marginal tax rate, further discouraging unnecessary withdrawals and promoting long-term preservation,” she said.

Article credit ‘More education’ needed around two-pot retirement reform, with eight days to go (dailymaverick.co.za)