The real cost of a two-pot savings withdrawal
On a R350 000 income, a R30 000 savings-pot withdrawal pays out R22 200 after tax - and the same money left in the fund could be R258 700 in 25 years.
In 30 seconds
- A savings-pot withdrawal is taxed at your marginal rate - 18% to 45% - not at the gentler retirement lump-sum rates.
- You may withdraw once per tax year, minimum R2 000.
- The bigger cost is the growth you give up: at 9% a year, R30 000 left alone for 25 years becomes about R258 700.
How the two-pot system works
Since 1 September 2024, new contributions to a pension fund, provident fund or retirement annuity are split between a savings component you can reach before retirement and a retirement component you cannot.
- One withdrawal per tax year (1 March to end-February), of at least R2 000 (National Treasury two-pot FAQ).
- Taxed at your marginal rate, not under the retirement lump-sum tables (SARS Budget 2026 FAQ).
- SARS debt comes off first. The fund asks SARS for a tax directive, and any tax you owe is deducted before you are paid (SARS media release).
The split of new contributions (one third to savings, two thirds to retirement) and the once-off seeding amount are from the Treasury FAQ as published in 2024; we could not re-open the full PDF when we checked on 15 Oct 2026.
Two costs, not one
The tax is added on top of your salary, so the withdrawal is taxed at the highest rate you already pay - or pushes part of it into the next bracket. Your fund's directive is an estimate; any difference is settled on assessment.
The lost growth is usually larger. Money that leaves the fund at 35 misses 30 years of compounding. A withdrawal that pays for a holiday today can cost several years of retirement income later.
When a withdrawal can make sense
- A real emergency with no cheaper option - and you have checked the cost of a short loan against the tax plus lost growth.
- Settling debt that costs more than the fund earns, such as a credit card at 20%+, provided you do not run it up again.
- A year with low other income, when your marginal rate is low or zero.
In every other case, an emergency fund is cheaper than your retirement savings.
How MaxWealth helps
The MaxWealth retirement tool works out what a savings-pot withdrawal costs on your own numbers: the tax at your marginal rate, and what it does to the income your savings would pay you at retirement, in today's money.
Sources
- Minimum R2 000, once per tax year: National Treasury - Two-pot system FAQ (updated August 2024).
- Taxed at marginal rate: SARS - Budget 2026 FAQ; SARS - Tax implications of withdrawing from the two-pot system.
- 2026/27 brackets and R17 820 rebate: SARS - Rates of tax for individuals.
- Tax and growth figures: our own calculation, shown in the calculator above.
Education, not financial advice. This post explains how the rules and the arithmetic work. It does not recommend any financial product, and your own situation may differ - speak to a registered financial adviser or tax practitioner before you act. Figures were checked against the linked sources on the date above.