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Sars has so far received 161 607 tax directive applications for pension fund members who want to withdraw funds from their saving pots under the two-pot retirement system totalling R4.1 billion.
The number of applications includes cancelled directives, while 159 853 relate to savings withdrawal benefits, which is 98.9% of the total number of applications received between 1 and 10 September.
Many people complain on social media that paying tax on their withdrawals amounts to double taxation.
Sars commissioner Edward Kieswetter says contributions to a pension or retirement fund are not taxed at the time of payment to the fund but deferred to the time you retire when it is taxed at a reduced rate. However, when you withdraw now, you will be taxed at your marginal tax rate.
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A member making a two-pot withdrawal will typically be employed and therefore earning employment income, which may or may not be above the tax threshold, depending on the outcome of the withdrawal. The sum you withdraw is added to your employment income.
These are the marginal tax rates for the tax year ending 28 February 2025:
| 18% | for taxable income below R237 100 |
| 26% | for taxable income above R237 100 |
| 31% | for taxable income above R370 500 |
| 36% | for taxable income above R512 800 |
| 39% | for taxable income above R673 000 |
| 41% | for taxable income above R857 900 |
| 45% | for taxable income above R1 817 000 |
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People who intend to withdraw from the savings pot of the two-pot retirement system must be registered for tax. If you are not registered for tax, Sars will reject the request for a tax directive from your pension fund.
“Administrators submit applications for tax directives to Sars via eFiling. The directive indicates to the fund how much tax it should withhold on behalf of Sars before payout.
“Taxpayers who owe Sars money must realise that this tax debt will be added to the tax on withdrawal from the savings benefit. But if there are payment arrangements in place to settle the debt with Sars, this debt will be deducted as per agreement between Sars and the taxpayer. A tax debt that has been deferred will also not be deducted,” Kieswetter says.
The turn-around time for Sars to complete directive applications without any human intervention is no more than 24 hours, he says.
The three reasons applicants give when they want to make a withdrawal from their savings pots under the two-pot retirement system are a transfer due to divorce, a transfer to a retirement fund and a withdrawal by the taxpayer.
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Taxpayers can get more information from Sars about the two-pot retirement system on the Sars Online Query System on the Sars website and the Sars WhatsApp channel (0800 11 7277), where taxpayers can do simulated tax calculations on their two-pot retirement system withdrawals.
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