The short answer: A two-pot savings withdrawal is taxed at your marginal rate, so you receive less than you ask for, and the money stops growing for your retirement. It can make sense in a real emergency when nothing cheaper is available, but it should not be the first thing you reach for. This post is general information, not advice, and your fund's own rules apply.
Since 1 September 2024, most retirement funds have had a savings pot you can draw on before you retire. It is easy to treat that pot as a cheap source of cash. The tax and the lost growth make it more expensive than it looks.
How does the two-pot system work?
From 1 September 2024, one third of your new retirement contributions goes into a savings component and two thirds goes into a retirement component. The retirement component stays locked until you retire. The savings component is the part you can withdraw. The post on pension, provident and retirement annuity funds explains how each fund type fits in.
Your fund statement shows the split. The savings component is built from contributions made since 1 September 2024, plus a once-off starting amount your fund moved across: 10% of your vested benefit as at 31 August 2024, capped at R30,000. That means the amount you can withdraw may be smaller than you expect, so check your latest statement before you plan around a number.
The main rules for the savings component are these:
- A withdrawal must be at least R2,000, and there is no upper limit other than your balance.
- You can withdraw once every tax year. The tax year runs from 1 March to the end of February, and the current one ends on 28 February 2027.
- The limit applies to each fund, and for retirement annuities to each contract, so someone with an employer fund and a retirement annuity can usually withdraw from each once a year. Check how your own funds apply it.
- You must be registered for income tax and give your fund a tax reference number, because the fund has to get a tax directive from SARS first.
- SARS will take any outstanding tax debt from the payout.
What will a withdrawal cost you in tax?
SARS says the withdrawal is taxed at your marginal rate, and that no retirement rates, deductions, exemptions or tax-free amounts are used. The fund pays you what is left after the tax, and your final tax is worked out when SARS assesses your return.
Here are three examples using the 2027 SARS tax table, for a R30,000 withdrawal. They assume you are under 65 and have no other deductions:
- Taxable income of R180,000 a year: the extra R30,000 takes you to R210,000, which is still in the 18% bracket. Tax is R5,400, so you keep R24,600.
- Taxable income of R300,000 a year: the extra R30,000 falls in the 26% bracket, which runs from R245,101 to R383,100. Tax is R7,800, so you keep R22,200.
- Taxable income of R370,000 a year: this one crosses a bracket. The first R13,100 is taxed at 26% (R3,406) and the remaining R16,900 at 31% (R5,239). Tax is R8,645, so you keep R21,355.
The third example is the one that catches people out. A withdrawal counts as income, so it can push part of your income into a higher bracket. TaxTim warns that if too little tax was deducted when you withdrew, you may owe SARS more when you file. Your fund will issue a tax certificate for the withdrawal, so keep it and include it in your return. If you were thinking of spending the whole payout, set some aside in case there is a bill later.
Your fund may also charge an administration fee, so ask before you apply. Either way, you will not receive the full amount, and the figure on the application is not what reaches your account.
What does it cost you in lost growth?
The second cost is invisible. Money that leaves the fund stops compounding. As an illustration only, not a forecast, R30,000 left invested at 8% a year grows to about R64,800 in ten years and about R139,800 in twenty years. The return is an assumption, and real returns vary, but the direction is clear: the earlier the withdrawal, the more it costs you at retirement.
Compare that with what you would receive today. At the 26% example you would keep R22,200 now and give up a R139,800 outcome in twenty years under that assumption. A small withdrawal today can be a large gap in your retirement savings.
Most people do not stop at one. According to retirement fund administrator statistics cited by Warren Ingram of Galileo Capital in August 2026, about two thirds of the people who withdrew in the first year withdrew again in the second, and the average withdrawal was R9,000 to R10,000. On the same 8% illustration, R10,000 added to your savings pot every year for ten years and left alone would be worth about R144,900. Withdraw it each year instead and that growth never happens, and you pay tax on every withdrawal as well.
When in the tax year should you withdraw?
Because you get one withdrawal a year from each fund, timing matters. Money you do not withdraw is not lost. It stays in the savings pot, and you can take it later. If you withdraw in March and a real emergency hits in January, you cannot withdraw again until the new tax year starts on 1 March.
There is a deadline trap as well. Funds need time to process applications, and some stop accepting them shortly before the tax year ends. The Government Employees Pension Fund, for example, closed its applications briefly at the end of February 2026 and reopened them on 2 March, and warned that an application submitted late could be processed in the new tax year and count as that year's withdrawal. If you are planning one in February, check your fund's cut-off, and apply well before it.
When might a withdrawal make sense?
The clearest case is expensive debt. A credit card can charge up to the repo rate plus 14%, which is 21.25% a year at the 7.25% repo rate set on 23 September 2026. If you keep R22,200 after tax and use it to clear a card balance of that size, you avoid about R4,718 a year in interest (R22,200 x 0.2125). That may beat the lost growth, but only if you stop the debt from coming back, which is why the save or pay off debt first guide is worth reading before you decide.
Other cases are a genuine emergency with no buffer, or a short gap after losing your job. The guide on handling your money after losing your job covers the other options to consider alongside this one.
What should you try first?
- Your own buffer. Even a small one reduces the need to withdraw. See how to start a buffer fund.
- A payment plan. Ask the creditor for one before the due date. The steps are in what to do with no emergency savings.
- Debt help. If repayments are the problem, compare debt review and a consolidation loan.
- Family or employer options. A salary advance or short family loan can cost far less than tax plus lost growth.
How can Budget Hub help?
If you are thinking of withdrawing, start with your numbers. Enter your income and expenses in Budget Hub, see where the shortfall comes from, and add a savings goal called Emergency Fund so you can watch it grow once the crisis passes. The free plan includes up to three savings goals, and the goals move through Bronze to Platinum levels as you get closer to the target.
Quick answers
What is the minimum two-pot withdrawal?
R2,000 from the savings component. You can make one withdrawal per tax year from each fund.
Is a two-pot withdrawal taxed?
Yes. It is added to your income and taxed at your marginal rate, without retirement rates or tax-free amounts, and your final tax is settled when SARS assesses your return. If too little tax was deducted, you may owe more.
Can you withdraw from more than one fund in the same tax year?
Industry guidance says the one-withdrawal limit applies to each fund, so you may be able to withdraw from each of your funds once. Each withdrawal is taxed, and the combined income can push you into a higher bracket.
Can you withdraw from the retirement component?
No. The retirement component stays preserved until you retire. Only the savings component can be accessed early.
Sources: SARS two-pot retirement system, SARS tax directives and the two-pot system, SARS rates of tax for individuals, National Credit Regulations, Regulation 42 (Government Gazette 39379), SARB Monetary Policy Committee statement, September 2026, Cape Argus on the GEPF reopening, March 2026, EWN on repeat withdrawals, August 2026, The Mercury on the tax surprise, July 2026, Moonstone on withdrawals per fund, July 2023. Rates, limits and thresholds change, so check the source for the current figure.
The savings pot is there for emergencies, not for upgrades. Check your fund's rules, work out the tax and the lost growth, and try the cheaper options first. If you still decide to withdraw, take only what the emergency needs.