These articles are general information and not financial, legal or tax advice. Rates, fees and rules change, so confirm current figures with the lender, the NCR or SARS before you act.
Since the two-pot system started in September 2024, many South Africans have been tempted to take money from their retirement savings instead of borrowing. It can look like a cheap shortcut, but it has a cost.
What to know about two-pot withdrawals
- You can generally make one savings withdrawal per tax year. Some funds, such as the GEPF, have processing cut-offs near the end of the tax year.
- The amount is taxed at your marginal rate, so you receive less than you withdraw.
- Whatever you take out will not be there when you retire, and you also lose the growth it would have earned.
What to know about a cash loan
- You keep your retirement savings, but you pay interest and fees.
- The total cost depends on the interest rate, fees and how long you take to repay.
- Missed payments can hurt your credit record.
How to decide
Work out what you would actually receive after tax from the withdrawal, then compare it with the total repayment on the loan. For a one-off emergency, a short loan may cost less than permanently reducing your retirement savings. For ongoing shortfalls, neither solves the problem, and a budget review or debt counselling may help more.
General information only. Ask your fund or a licensed financial adviser about your own situation.
Compare the after-tax withdrawal with the total loan repayment before you decide.