The South African government estimates that once the system goes live on September 1, 2024, there will be a healthy two-pot retirement payout, reports Daily Investor.
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R5 billion More precisely, in tax revenue. This was confirmed following last week's National Budget speech. For those unfamiliar with South Africans, this two-pot retirement benefit comes from people being able to access a portion of their assets before retirement age.
2-pot retirement windfall
This is the meaning of the two-pot retirement of the national treasury, with contributions to be split from September 2024. One-third goes to the 'savings pot', while the remaining two-thirds goes to the 'retirement pot' and cannot be touched there.
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Additionally, you can withdraw the amount from the savings portion before retirement. However, withdrawals can only be made once a year and the minimum withdrawal amount is R2,000.
to keep balance
Additionally, the two-pot retirement windfall is all about preserving people's retirement contributions. But for some people, accessing funds is also necessary to ease their financial burden during difficult times, Finance Minister Enoch Godongwana said.
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Contributions to a retirement fund continue to be tax-deductible and tax-free while the fund grows. However, withdrawals from the pre-retirement savings portion are taxed like all other income. This would allow for a windfall of R5 billion in two-pot severance payments to the Treasury. “The best option is still to save for as long as possible, as retirement savings grow with compound interest and can attract lower tax rates,” Godongwana concluded.
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