New 2 Pot Pension Fund – system. Do not withdraw a cent before watching this video.

Key Points:

1. Introduction to the Two-Pot Pension System (00:08–00:45):
   • Pension contributions are divided into two components:
     • Retirement Pot: Locked until retirement.
     • Savings Pot: Allows limited withdrawals for emergencies or specific needs like upgrades to your Durbanville home.
   • Withdrawals from the savings pot are allowed once per tax year and are taxed at your marginal tax rate.
2. Contribution Example (00:45–01:22):
   • If contributing R3,000 monthly, R2,000 goes to the retirement pot, and R1,000 to the savings pot.
   • Starting from 1 September 2024, 1/3 of contributions will be available in the savings pot.
3. Withdrawal Benefits (01:22–02:03):
   • Home upgrades using savings pot funds can increase property value and improve quality of life.
   • Enhancements like energy-efficient upgrades can save money long-term.
   • Minimum withdrawal amount: R2,000; no maximum limit, subject to availability in the savings pot.
4. Risks and Downsides of Withdrawal (02:03–02:42):
   • Impact on Retirement Savings: Reduces funds available for long-term financial security.
   • Tax Implications: Withdrawals are taxed, affecting overall returns.
   • Example: At a 30% marginal tax rate, withdrawing R25,000 results in R7,500 tax deducted.
5. Situations Where It May Be Worth It (02:42–03:25):
   • Lack of affordable credit options.
   • Significant home upgrades that boost value or reduce costs (e.g., solar systems).
   • Ensuring the remaining retirement fund is still robust enough to meet goals.
6. When to Reconsider (03:25–04:06):
   • Nearing retirement without time to rebuild savings.
   • Potential for high tax penalties.
   • Availability of cheaper financing options.
7. Impact of the New System (04:06–04:48):
   • R21.4 billion withdrawn in the first month of implementation (September 2024).
   • Reflects strong demand and potential short-term economic growth effects.
8. Closing Advice (04:48):
   • Carefully weigh the pros and cons of withdrawing funds.
   • Prioritize retirement security when making decisions.
   • Use tools like retirement and tax calculators for informed choices.
9. Encouragement to Stay Informed (04:48):
   • Stay updated on policies affecting pensions and finances.
   • Final reminder by Peter Ker to protect both your home and future.