R28 Billion Paid Out Since Implementation of Two-Pot Retirement System, Financial Expert Unsurprised
- Since the implementation of the two-pot retirement system, approximately 1.5 million applications have been received
- Commissioner of SARS Edward Kieswetter advised citizens to ensure their tax was up to date before submitting an application
- Financial expert Mason Meyer said he wasn't surprised by the amount of people applying for withdrawals from their savings
Source: Getty Images
More than 1.5 million South Africans have already applied for a portion of their savings following the start of the two-pot retirement system.
The system, which took effect on 1 September 2024, allows citizens to withdraw from their retirement savings.
One-third of the savings can be withdrawn and accessed at any time, while the remaining two-thirds are inaccessible until a person reaches retirement age.
Approximately R28 billion already paid out
Last week, the South African Revenue Service (SARS) stated that a total gross lump sum of R21.4 billion had already been paid out to applicants.
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SARS added that at least 1.2 million applicants were received, with at least 1.14 million approved. That number has since gone up.
SARS Commissioner Edward Kieswetter has since confirmed that payouts would surpass the R28 billion mark as the number of applicants grew to 1.5 million over the weekend.
Kieswetter also reminded South Africans to ensure their tax was up to date before applying.
“Before they make withdrawals, they need to make sure that their tax affairs are in order. Because not only will tax be deducted from the amount at the marginal rate, but also any outstanding debt, unless there is an arrangement in place, will be deducted.”
Financial expert unsurprised by number of applicants
Speaking exclusively to Briefly News, financial expert Mason Meyer said he expected the initial withdrawal numbers to be relatively high.
“I expected that the initial withdrawal numbers would have been relatively high. There are a lot of individuals who are in debt in South Africa across all income groups due to the constant rise in the cost of living, amongst other factors.
Meyer, who has an Honor’s Degree in Finance and has been dealing with the two-pot retirement system, explained that one would get a better idea of the extent of the withdrawals from the savings component once the next tax year starts in March 2025.
“Let’s see how much is withdrawn next year now that the initial hype has worn off.”
He also touched on concerns that many South Africans were withdrawing the money just because it was available, saying that it was a positive thing if individuals were using it to pay off short-term debt and get into a stronger financial position.
Finance Minister issues stern warning
Finance Minister Enoch Godongwana has issued a warning to citizens to use their retirement savings wisely.
The minister urged citizens not to waste their money when the two-pot retirement system came into effect.
Many ignored his warning and said they would spend their money however they wished, Briefly News previously reported.
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Source: Briefly News
