How much can I withdraw from my savings pot?

One withdrawal per tax year per fund, with a minimum of R2,000 and a maximum of whatever the savings pot holds. If you have both a pension fund and a retirement annuity, each carries its own allowance.

How is a two-pot savings withdrawal taxed?

The amount is added to your taxable income for the year and taxed at your marginal rate, with no exemption and no tax-free portion. The retirement lump-sum tables do not apply. SARS can also deduct any tax you already owe from the payout.

How much tax do I pay on a lump sum at retirement?

The first R550,000 is taxed at 0%, then 18% to R770,000, then R39,600 plus 27% to R1,155,000, then R143,550 plus 36% above that. SARS aggregates every retirement lump sum taken since 1 October 2007 to set the rate, so the R550,000 is a lifetime allowance rather than a fresh one each time.

How much can I draw from a living annuity each year?

Between 2.5% and 17.5% of the remaining value a year, which you can reset on the policy anniversary. Where you buy more than one annuity, at least R165,000 must remain in each.

What was seed capital in the two-pot system?

A once-off amount moved into the savings pot when the system started: 10% of your vested pot value on 31 August 2024, capped at R30,000. After that the savings pot only grows from one-third of your future contributions.

The two-pot retirement system explained

Q: Can I take my whole retirement pot as cash?

Only if it is small. Where two-thirds of the non-vested part of your vested pot plus the whole retirement pot comes to R240,000 or less, you can take all of it in cash. That threshold was R165,000 until 28 February 2026, and it is applied per fund. Above it, the retirement pot must provide an income.

Guide · ~5 min read · Updated August 2026

On 1 September 2024, South Africa changed how retirement funds work. The two-pot retirement system splits your future contributions into two parts: one you can reach in an emergency before retirement, and one that stays locked away for it.

It solves a long-standing problem, people cashing out their entire retirement savings when they change jobs, while still leaving a controlled valve for genuine emergencies. It applies to pension funds, provident funds, preservation funds, and retirement annuities.

Three pots, not two

Despite the name, there are three components. The two new ones are the savings and retirement pots. The third, the vested pot, is everything you had saved before the rules changed.

Pot	What goes in	Can you access it before retirement?
Savings pot	One-third of contributions made from 1 Sept 2024	Yes: one withdrawal per tax year per fund (minimum R2,000), taxed at your marginal rate
Retirement pot	Two-thirds of contributions made from 1 Sept 2024	No: preserved until retirement, then used to provide an income
Vested pot	Everything you saved before 1 Sept 2024	Keeps the old rules that applied to it

Seed capital: the savings pot's starting balance

So the savings pot wasn't empty on day one, a once-off seed amount was moved into it: 10% of your vested pot value on 31 August 2024, capped at R30,000. That seed is what many people withdrew in the first months of the system. After that, the savings pot only grows from your future one-third contributions.

Accessing the savings pot

You can make one withdrawal per tax year from the savings pot, with a minimum of R2,000. The limit runs per fund, so if you hold both a pension fund and a retirement annuity, each carries its own allowance. It's convenient, but it isn't free money.

The amount is added to your taxable income and taxed at your marginal rate, so a withdrawal can push part of your income into a higher bracket.
Money taken out now stops compounding for decades. The real cost is the growth you give up, on top of the tax.
Any amounts you owe SARS can be deducted from the payout.

The savings pot works best as a genuine emergency buffer, well clear of your day-to-day spending.

What happens at retirement

At retirement, the retirement pot must be used to provide an income, usually by buying an annuity, rather than taken as cash. That's the preservation the system is built to enforce. The vested pot continues to follow the rules that applied to it before the change.

The savings pot is handled differently, and the detail matters. Whatever is left in it is ignored when working out how much you must annuitise, but you can still take it as cash, and it counts towards the lump-sum tax below.

There is one exception to compulsory annuitisation. If two-thirds of the non-vested part of your vested pot, plus the whole of your retirement pot, comes to R240,000 or less, you can take all of it in cash. That threshold was R165,000 until 28 February 2026. It is applied per fund, so two funds are tested separately.

Tax on a lump sum at retirement

Cash taken at retirement is taxed on its own table, which is much gentler than the one that applies to withdrawing early:

Lump sum	Tax
First R550,000	0%
R550,001 to R770,000	18% of the amount above R550,000
R770,001 to R1,155,000	R39,600 + 27% above R770,000
Above R1,155,000	R143,550 + 36% above R1,155,000

One catch: SARS adds together every retirement lump sum you have taken since 1 October 2007 to decide the rate. So the R550,000 at 0% is a lifetime allowance, not a fresh one each time you retire from a fund.

How much income the retirement pot pays

If you buy a living annuity, you choose the income within limits: between 2.5% and 17.5% of what is left in it each year, which you can reset on the policy anniversary. Drawing near the top of that range usually runs the capital down quickly. Where you buy more than one annuity, at least R165,000 has to remain in each.

Why it exists

Before September 2024, a member who resigned could often withdraw their entire fund in cash, and many did, arriving at retirement with little left. The two-pot system keeps two-thirds of new contributions preserved however often you change jobs, while the one-third savings pot gives you a limited, taxed release valve for emergencies. It's a deliberate trade-off between access and preservation.

A note for older provident-fund members

Members of provident funds who were 55 or older on 1 March 2021 and stayed in the same fund were excluded from two-pot by default. They stayed on the old rules unless they actively chose to opt in, and that election had to be made by 1 September 2025. That window has closed, so if this is you and you never opted in, your contributions continue under the old rules. Check with your fund which rules you are on.

Related guides

TFSA vs retirement annuity: how retirement annuities, now under two-pot, compare with tax-free savings.
2026/2027 SARS tax brackets: the marginal rates a savings-pot withdrawal is taxed at.

Educational only, and the rules are still bedding down. Confirm the current position with your retirement fund or a registered financial adviser before acting. See how we model retirement across the tools on the Methodology page.