Since 1 September 2024, a member of a pension, provident, preservation or retirement annuity fund can take cash out of a savings pot while still in the fund. SARS says the minimum is R2,000 and the member may do it once every tax year.
What are the three pots?
According to SARS, the member’s balance as at 31 August 2024 sits in the vested pot, less a seed of 10% of that balance, capped at R30,000, which goes into the savings pot. SARS says paying out the rest of the vested pot as a lump sum before retirement is not affected by the system.
From 1 September 2024, one-third of each contribution goes to the savings pot and two-thirds to the retirement pot. The retirement pot pays a pension or buys an annuity at retirement. SARS says a member who resigns or is retrenched cannot take it as cash and must move it to another fund.
How much can a member take?
The minimum is R2,000 and the maximum is whatever the savings pot holds. SARS gives the limit as one withdrawal in each tax year. The fund asks SARS for a tax directive, and once the fund sends that request, SARS says the decision cannot be cancelled.
How is a withdrawal taxed?
The withdrawal is taxed as an annual payment at the member’s marginal rate. SARS says no retirement rates, deductions, exemptions or tax-free amounts apply. In the 2026/27 table the rates run from 18% to 45%, and the third bracket, 31%, covers income from R383,101 to R530,200.
Source: South African Revenue Service media releases of 11 October 2024 and 31 January 2025. Totals are to date on each release. Chart: Rand Desk
The amount sits on top of the member’s other income. A member with taxable income of R400,000 who withdraws R30,000 stays in the 31% bracket and pays R9,300 on it.
Who is turned down?
A member must be registered for tax. SARS said it will not issue a directive to anyone with outstanding returns, and the fund takes any tax debt from the payout first. SARS says no debt is deducted from a member with a payment arrangement, but a member in arrears has it deducted. A garnishee order does not automatically count as an arrangement, SARS said.
How many people have used it?
By 31 January 2025, SARS had received 2,664,279 applications and approved 2,403,379, with a gross R43.42 billion paid. On 11 October 2024 the figures were 1,213,646 applications and R21.4 billion. SARS flagged 213,654 taxpayers who declared too little income in applications to get a lower rate, and said it would impose a penalty on them.
SARS offers a calculator on its online query system, on eFiling and on the MobiApp, and says it gives an illustrative amount. Registration for tax can be checked on the online query system, the MobiApp, eFiling, WhatsApp on 0800 11 7277 or the code 1347277#. Outstanding returns can be checked on eFiling, the online query system or the same code. The rates are set out in how income tax brackets and rebates work.
