You might have seen news or read about this new Two-Pot retirement system.
I don’t like it. It basically lets people access the 1/3rd of their retirement savings that they were only allowed to access at retirement, now during the years before retirement. With minimums and maximums and some rules.
Supposed to be for ‘emergencies’, so the reason behind it all states. But who determines or regulates what an emergency is…? No one can and no one will. I have one corporate client already wanting something for a holiday. This ruling is not going to fix or help people’s ability to retire independently.
Every withdrawal during these prior years is taxed. And SARS is looking forward to this: they already anticipate a 5 billion Rand revenue earnings from this tax over the next year or so.
So you reduce your retirement wealth, your funds have less time to grow, you pay income tax on every withdrawal, you do this every two or three years for a couple of thousand Rand, and then you’re worse off at retirement.
Not a great idea.