The Office of the Pension Funds Adjudicator (OPFA) has dismissed two complaints from members who were unhappy with their funds’ handling of withdrawals under the two-pot retirement system.
Implemented on 1 September 2024, the regime allows members to access a portion of their savings before retirement. However, withdrawals are limited to one per tax year, with a minimum of R2 000, and only from the savings pot – not from the vested or retirement pots.
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Withdrawals are taxed at a member’s marginal rate, and any outstanding debt owed to the South African Revenue Service (Sars) can be deducted.
Deputy Pension Funds Adjudicator Naheem Essop dismissed both complaints, finding that the funds had acted within the law and their respective rules.
However, he points out that despite extensive education and awareness programmes about the functioning of the two-pot system, a significant number of members do not fully understand its rules.
“This leads to complaints lodged with the OPFA,” he says.
Listen/read: Repeat withdrawals raise red flags in SA’s two-pot retirement system
In its latest annual report, OPFA notes that there was a sharp rise in complaints following the launch of the two-pot system on 1 September 2024, with the office fielding 1 666 related telephone enquiries between the launch date and March 2025.
Read: Two-pot payouts surge to R57bn, with 4m withdrawals
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Savings-pot complaint
In the first case, a member of the Lifestyle Retirement Annuity Fund complained after being denied a second withdrawal from his savings pot.
He purchased a retirement annuity in 2006, which became paid-up in 2014, and received a payment of R21 937.23 (after tax) in September 2024 into his savings pot as seeding capital.
(When the system came into effect, retirement fund members received 10% of their retirement savings as at 31 August 2024, capped at R30 000.)
The complainant argued that he should be entitled to make another “annual withdrawal” despite not contributing further to the fund.
The fund explained that since no premiums were paid after 1 September 2024, no additional allocations were made to his savings pot, leaving no funds available for a second withdrawal.
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Essop upheld the fund’s decision, confirming that only the seeded 10% of the vested pot (up to R30 000) is initially transferred into the savings pot.
Without ongoing contributions, no further accruals occur. “The complainant’s savings withdrawal benefit was paid in accordance with the fund’s rules and there were no further benefits due,” he said.
The complaint was dismissed.
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Vested-pot complaint
In the second case, a member of the South African Retirement Annuity Fund sought access to his vested component, claiming financial hardship.
He purchased a retirement annuity policy in 2002, made it paid-up in 2008, and withdrew R4 205.70 from his savings pot in October 2024.
He argued that both the old and new rules should allow him access to his vested pot following retrenchment.
The fund rejected the claim, noting that under the Pension Funds Act, vested benefits in a retirement annuity may only be paid at retirement age (55 or older), or earlier only if the member is permanently disabled, has a total policy value below R15 000, or has formally emigrated.
The member’s annuity was made paid-up before the implementation of the two-pot system, which means the rules previously applicable to withdrawals remain.
“There were always limitations placed on withdrawals from retirement annuities,” Essop said.
The complaint was dismissed.
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