Big Changes in SA Retirement Law – Will You Retire Later or Earn a Bigger Pension? Full Breakdown Here

SA Retirement Law Changed – South Africa is undergoing significant reforms in retirement legislation that could directly impact when citizens can retire and how much they receive in pension benefits. These updates are part of the government’s broader financial sustainability and social protection strategy. Whether you’re a current contributor, nearing retirement, or already a pensioner, it’s essential to understand these new retirement laws and how they might affect your future financial planning.

New Retirement Law : What Has Changed in 2025?

The South African government has introduced a fresh set of retirement policies aimed at promoting long-term savings and strengthening retirement security. These changes are part of the “Two-Pot Retirement System,” which came into effect on 1 September 2024.

Here are the major changes:

• The introduction of a “Two-Pot System” that separates retirement savings into accessible and preservation components.
• Earlier access to a portion of retirement funds before retirement age.
• Preservation of the bulk of pension savings until official retirement.
• Increased minimum retirement age from 55 to 60 years for certain government employees.

Adjustments to taxation on withdrawals and lump sums.

 

What is the Two-Pot Retirement System?

Under the new Two-Pot Retirement System, pension savings will now be divided into three components:

• Savings Pot: Allows annual withdrawal of up to one-third of contributions, accessible once per year.
• Preservation Pot: The remaining two-thirds, locked until formal retirement age.
• Vested Pot: Existing retirement funds before the law took effect, which will remain under old rules.

Comparison Table: Old vs New Retirement Law

Feature	Old System	Two-Pot System (2025)
Access to funds before retirement	Not allowed	Allowed (from savings pot only)
Minimum retirement age	55	60 (for certain government sectors)
Withdrawals frequency	On resignation or retirement only	Once annually (from savings pot)
Tax on lump sums	Fixed slab	Revised based on pot type
Employer contributions	One pool	Split into two pots
Vested rights	Entire fund	Separated into three components
Objective	Long-term savings	Balanced access and preservation
Effective date	NA	1 September 2024

How Will These Changes Affect You?

Whether you benefit or lose out under the new system depends on your employment type, contribution history, and proximity to retirement.

For Working Individuals:

• You can now access some funds early in emergencies.
• You must preserve a larger portion of your fund until retirement.

For Government Employees:

• If employed under specific sectors (e.g., SAPS, SANDF), retirement age rises to 60, unless otherwise stated.
• Transitional clauses apply to those already near the old retirement age of 55.

For Pensioners:

• No impact on those already receiving pensions.
• New pensioners may see adjusted calculations based on the split components.

For Employers:

• Required to revise payroll systems to accommodate the two-pot structure.
• Must provide transparent breakdowns in payslips.

Pros and Cons of the New System

Pros	Cons
Emergency access to partial funds	Complicated structure
Stronger enforcement of long-term savings	Limited flexibility on preservation pot
Encourages better financial planning	May not favor low-income earners
Reduces full withdrawal at resignation	Needs better public awareness

How to Access Funds From the Savings Pot

To withdraw from the Savings Pot, follow these steps:

• Submit a withdrawal request through your fund administrator.
• Provide valid reason and documentation (medical bills, emergencies, etc.).
• Ensure the amount requested does not exceed the annual limit.

Note: Only one withdrawal per year is allowed from this component.

Frequently Asked Questions (FAQs)

Q1: When does the Two-Pot System come into effect?
A: The new system began on 1 September 2024.

Q2: Can I still retire at 55?
A: Only if you’re in the private sector or not affected by the new age threshold. For many government workers, the age has increased to 60 years.

Q3: Is the entire pension now locked until 60?
A: No, only the Preservation Pot is locked. The Savings Pot is accessible yearly.

Q4: Will my existing pension be affected?
A: Existing savings before the change go into a Vested Pot and remain unaffected.

Q5: How will withdrawals be taxed?
A: Withdrawals from the Savings Pot will be taxed as per income tax slabs. The Preservation Pot will be taxed upon retirement as per existing rules.

Q6: Can I opt out of this system?
A: No, the system is mandatory for all provident and pension fund members.

Q7: What if I change jobs?
A: Your pots will transfer with you under your fund’s policies, maintaining the same structure.

Q8: Where can I get more help or clarity?
A: Contact your fund manager or government helpline (see details below).

Key Contact Details

Department/Fund	Contact Number	Email/Website
National Treasury (SA)	012 315 5111	www.treasury.gov.za
Government Employees Pension Fund	0800 117 669	[email protected]
Financial Sector Conduct Authority	0800 20 37 22	www.fsca.co.za
SASSA (For Grants Queries)	0800 60 10 11	www.sassa.gov.za
SARS (Tax Queries)	0800 00 72 77	www.sars.gov.za
Retirement Fund Administrators	Check with your HR	Check official pension fund website

Important Terms to Remember

• Savings Pot – Accessible once a year, limited withdrawal
• Preservation Pot – Locked till retirement, ensures future security
• Vested Pot – Old savings under pre-2024 rules
• Retirement Age – Varies depending on your employment sector
• Fund Administrator – Your point of contact for accessing or changing your retirement plan

The overhaul in South Africa’s retirement legislation, especially with the Two-Pot System, marks a major turning point for long-term financial planning. While it provides more flexibility with early withdrawals, it also enforces stronger saving discipline to secure your retirement. If you’re unsure how these changes affect you, consult your HR or retirement fund administrator immediately. Awareness and informed action are key to making the most of your retirement savings.