https://en.sputniknews.africa/20241012/south-africans-rush-to-access-pension-funds-under-new-reform-1068657401.html
South Africans Rush to Access Pension Funds Under New Reform
South Africans Rush to Access Pension Funds Under New Reform
Sputnik Africa
Last month, South African President Cyril Ramaphosa signed into law the Pension Funds Amendment Bill, which amends pension-related legislation to allow for the... 12.10.2024, Sputnik Africa
2024-10-12T15:48+0200
2024-10-12T15:48+0200
2024-10-12T15:48+0200
sub-saharan africa
south africa
southern africa
taxes
pension
reforms
economy
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South Africa's tax service, SARS, has reported a surge in pension withdrawals since a new reform allowing partial withdrawals before retirement came into effect six weeks ago. A total of 21.4 billion rand ($1.2 billion) has been paid out under the new "two-pot" pension policy.The reform has seen a dramatic increase in withdrawal applications. While initial withdrawals in the first ten days after implementation totaled 4.1 billion rand ($235.5 million), SARS has now received over 1.2 million applications, a significant jump from the 160,000 applications.The new system, designed to balance long-term retirement savings with short-term financial flexibility, divides retirement contributions into a savings component (one-third) and a retirement component (two-thirds).The savings component is accessible at any time with a minimum withdrawal of 2,000 rand ($115), but only one withdrawal is permitted per tax year. These withdrawals are taxed at the individual's marginal tax rate, boosting government revenue.Significant further withdrawals are expected in the final months of 2024, with the central bank estimating a range of 40 billion rand ($2.3 billion) to 100 billion rand ($5.7 billion) in the fourth quarter.
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south africa, southern africa, taxes, pension, reforms, economy
south africa, southern africa, taxes, pension, reforms, economy
South Africans Rush to Access Pension Funds Under New Reform
Muhammad Nooh Osman
Writer/Editor
Last month, South African President Cyril Ramaphosa signed into law the Pension Funds Amendment Bill, which amends pension-related legislation to allow for the implementation of a recently enacted two-pot pension system designed to balance long-term retirement savings with short-term financial flexibility.
South Africa's tax service, SARS, has reported a surge in pension withdrawals since a new reform allowing partial withdrawals before retirement came into effect six weeks ago. A total of 21.4 billion rand ($1.2 billion) has been paid out under the new "two-pot" pension policy.
The
reform has seen a dramatic increase in withdrawal applications. While initial withdrawals in the first ten days after implementation totaled 4.1 billion rand ($235.5 million), SARS has now received over 1.2 million applications, a significant jump from the 160,000 applications.
The new system, designed to balance long-term retirement savings with short-term financial
flexibility, divides retirement contributions into a savings component (one-third) and a retirement component (two-thirds).
The savings component is accessible at any time with a minimum withdrawal of 2,000 rand ($115), but only one withdrawal is permitted per tax year. These withdrawals are
taxed at the individual's marginal tax rate, boosting government revenue.
Significant further withdrawals are expected in the final months of 2024, with the central bank estimating a range of 40 billion rand ($2.3 billion) to 100 billion rand ($5.7 billion) in the fourth quarter.
