Cash in my pension when I change jobs — what does it cost?

The two-pot system in one minute

• Since 1 September 2024 your fund has up to three pots. What you saved up to 31 August 2024 is the vested pot. From then on, one-third of contributions goes to the savings pot and two-thirds to the retirement pot. The savings pot was started with 10% of the old balance, up to R30 000.
• Savings pot: one withdrawal a tax year, of at least R2 000 — whether or not you change jobs. It is added to your income and taxed at your marginal rate.
• Vested pot: an employer pension or provident fund lets you cash it in when you resign, taxed on the SARS withdrawal lump-sum table. A retirement annuity (RA) does not — its vested pot stays in until at least 55.
• Retirement pot: never cashed in before retirement, not even when you resign. It moves with you to the new fund or a preservation fund.

How we calculate it

• Tax on the savings pot = income tax on your income plus the withdrawal, less income tax on your income alone (SARS 2026/27 tables, under-65 rebate unless you are older).
• Tax on the vested pot = the withdrawal lump-sum table on this withdrawal plus any earlier withdrawal lump sums, less the tax on the earlier ones alone — that is how SARS adds them up.
• What it costs at retirement = the amount taken, grown at the fund’s return until you retire. The cash you take is treated as spent; if you invest it instead, you keep part of that back — less the tax.
• Rand as at retirement, and in today’s rands using the inflation you enter. Returns and inflation are assumptions, not promises.

Where the figures come from

• Withdrawal lump-sum table (2025 to 2027 tax years): first R27 500 tax-free, then 18% to R726 000, 27% to R1 089 000, 36% above, cumulative with earlier withdrawal lump sums. SARS, Retirement lump sum benefits.
• Income tax 2026/27: brackets from 18% to 45%, primary rebate R17 820. SARS, Rates of tax for individuals.
• Two-pot rules: start 1 September 2024, tax at your own rate, a SARS directive for every withdrawal. SARS, Two-pot retirement system. One-third / two-thirds split, 10% seed capped at R30 000, one withdrawal of at least R2 000 a tax year. National Treasury, Two-pot FAQ (August 2024).
• Our estimates, not sourced: the 9% fund growth (as in our other tools), 5% inflation and the example balances. Use your own.

Left out: fund administration fees on a withdrawal, your fund’s own rules (some limit or delay a resignation cash-out), a savings pot below R2 000 when you leave the fund, retrenchment and severance (taxed on a different table), emigration, and the 65-plus and 75-plus rebates if you are that age. Savings-pot withdrawals do not use up the tax-free part of your retirement lump sum; vested-pot withdrawals do, because they are added to it at retirement. See also the retirement calculator. Calculations, not advice.