Although the system is referred to as the Two-Pot System, for many people with an existing retirement fund on 31 August 2024 there will in fact be three pots.

From 1 September 2024, fund members’ retirement contributions will be split as follows:

• Retirement Pot: TWO THIRDS of a retirement fund members contributions will go into their Retirement Pot which is the bulk of their retirement savings and which members of retirement funds are not allowed to access until normal retirement age.
• Savings Pot: ONE THIRD of a retirement fund members contributions will go into their Savings Pot. All of this pot can be accessed by the member prior to the normal retirement age, should they have an emergency and an urgent need to access. Conditions do apply to the Savings Pot including a minimum withdrawal of R2 000 (members with less than R2 000 in their Savings Pot cannot make a withdrawal). You may only make one withdrawal per tax year (from 1 March to 28 February) until you retire.
• Vested Pot: If you have a retirement fund on or before 1 September 2024 your current retirement fund will be moved into a Vested Pot. This pot will be 90% of your current retirement fund – with the 10% balance used to kick-start your Savings Pot as seed funding. This seed funding will be limited to R30 000 and this will be a once-off event. The remaining fund balance, called the Vested Pot, will still belong to you. The Vested Pot will continue to grow with investment returns, but no new contributions can be made into this pot. These funds will be available to you as a cash lump sum if you leave the fund.

So, to illustrate this, if by 31 August 2024 your retirement savings have a fund balance of R300 000 the following will happen:

• 10% of the R300 000 (R30 000) will be moved to your Savings Pot as seed funding.
• You will have R270 000 remaining in the Vested Pot.

From 1 September the following will happen:

• Two thirds of new contributions to your retirement funds will be added to your Retirement Pot.
• One third of new contributions will be added to your Savings Pot.