SABC News reports that the South African Revenue Service (SARS) says withdrawals by retirement fund members from funds when the two-pot retirement system kicks in, will be taxed. The two-pot retirement system kicks in on Sunday, 1 September 2024. Deputy SARS commissioner, Johnstone Makhubu says contributions to retirement funds are not taxed. “When people make contributions to their pension funds, those contributions are not taxed. And the taxing event arises when you withdraw at retirement or when you resign. So the fact that those deductions are not taxed when they are made, means that the government and the system are trying to encourage people to continue to save, knowing that the taxing event is deferred to a future date.”

Makhubu says those earning below R95 000 annually will not be taxed when they make retirement withdrawals under the two-pot system. “A withdrawal triggers a taxing event and that is why in this instance because there is a withdrawal, we are now applying the right to tax. How it works, it works at the rate that a person falls within in line with the income that they earn and starting off at 18% going up to 45%, if you are earning above 1.5 million; so it is progressive and if you are below the threshold of tax which I think is around R95 000 then there is a tax-free implication in as far as the deductions are concerned.”