Pension Withdrawal Calculator
Calculate your Two-Pot savings pot withdrawal for a property deposit — see the tax cost, net amount, and long-term retirement opportunity cost under South Africa's Two-Pot Retirement System
Two-Pot Withdrawal — How It Works
Under the Two-Pot Retirement System (effective 1 September 2024), your retirement fund is split into three components:
| Component | Access | Tax Treatment |
|---|---|---|
| Vested Pot | Only on resignation or retirement (old rules) | Retirement lump sum tax table (first R550k tax-free at retirement) |
| Savings Pot (1/3 of new contributions) | One withdrawal per tax year, min R2,000 | Taxed at marginal income tax rate |
| Retirement Pot (2/3 of new contributions) | Only at retirement — must buy annuity | Annuity income taxed in retirement |
The seeded amount (10% of vested pot, max R30,000) was automatically added to the savings pot on 1 September 2024. Future contributions split 1/3 to savings, 2/3 to retirement pot.
The Two-Pot Retirement System Explained Two-Pot • Tax • Property deposit
What is the Two-Pot Retirement System?
The Two-Pot Retirement System became effective on 1 September 2024 and applies to all pension funds, provident funds, and retirement annuity funds in South Africa. It introduced a new structure for retirement savings contributions made from that date:
- Retirement Pot (2/3 of new contributions): Fully preserved until retirement. Must be used to purchase an annuity. Cannot be accessed before retirement.
- Savings Pot (1/3 of new contributions): Accessible once per tax year. Minimum withdrawal R2,000. Taxed at your marginal income tax rate.
- Vested Pot (all pre-Sep 2024 contributions): Governed by old rules — accessible on resignation or retirement. Gets the first R550,000 tax-free at retirement.
On 1 September 2024, a seeded amount equal to 10% of your vested pot (maximum R30,000) was automatically transferred to your savings pot to give you something to access immediately.
Using a Pension Withdrawal for a Property Deposit
Opportunity Cost = Future Value of Withdrawn Amount − Net Withdrawal
Bond Interest Saved ≈ Net Deposit × Bond Rate × Term × 0.5
The key trade-off is comparing the net deposit you receive today (after paying marginal rate tax) against the future retirement value of leaving that amount invested tax-free inside the fund. At 10% annual growth over 20 years, R50,000 grows to approximately R336,375 — while the net deposit after 31% tax is only R34,500.
Worked Example — Ayanda's Property Deposit
Ayanda wants to buy a R1,500,000 home and needs a R150,000 deposit (10%). Her savings pot has a balance of R80,000.
She withdraws R75,000 from her savings pot. At her marginal rate of 31%, SARS withholds R23,250 in tax. She receives R51,750 net.
She supplements this with R98,250 in cash savings to make up the full R150,000 deposit.
The opportunity cost: R75,000 invested at 10% for 25 years (to her retirement) would have grown to approximately R812,000. The pension withdrawal is a significant long-term cost for a short-term property need.
Conclusion: Only use the savings pot as a last resort. Consider all other savings options — Tax-Free Savings Account, 32-day notice deposits, access bonds — before accessing your pension.
Frequently Asked Questions
How much can I withdraw from my savings pot under the Two-Pot system?
You can withdraw the entire balance of your savings pot, subject to a minimum of R2,000. Only one withdrawal per tax year is permitted. Your savings pot balance is your seeded amount (10% of vested, max R30,000) plus 1/3 of all new contributions since 1 September 2024.
How is a Two-Pot savings pot withdrawal taxed?
Savings pot withdrawals are taxed at your marginal income tax rate — just like a salary bonus. Your fund administrator is required to withhold PAYE on the withdrawal before paying it to you. This is different from retirement fund lump sums at retirement, which benefit from the first R550,000 being tax-free under the retirement lump sum tax table.
Does withdrawing from my pension affect my retirement?
Yes, significantly. Money withdrawn from the savings pot loses the benefit of tax-free compound growth inside the fund. At 10% annual growth over 20 years, R50,000 grows to approximately R336,000. You also pay marginal rate tax on the withdrawal amount, so a R50,000 gross withdrawal at 36% gives you only R32,000 net. The long-term retirement impact is typically 6–8 times the cash received.
What is the seeded amount in the Two-Pot system?
On 1 September 2024, each retirement fund member received a one-off seeded amount transferred from their vested pot to their savings pot. The seeded amount is 10% of your vested pot balance on 31 August 2024, capped at a maximum of R30,000. This gave members immediate access to some funds from the new system.
Are there better alternatives to a pension withdrawal for a property deposit?
Yes. Before accessing your pension, consider: Tax-Free Savings Account (TFSA) — no tax on withdrawal and no retirement impact; access bond or offset account if you already own property; Family loan at the SARS official rate; First Home Finance (FLISP) subsidy if your income is below R22,000/month; or simply saving for longer in a money market account. The pension should generally be a last resort for property deposits.