The Revenue Laws Amendment Bill of 2023 and the Pension Laws Amendment Bill were enacted by the President of South Africa, setting the stage for the implementation of the two-pot retirement system on 1 September 2024.

The Fund has been actively engaging with members through information sessions at various municipalities and depots, addressing questions and clearing up uncertainties.

This news update provides answers to the most common questions raised during these sessions. It also includes the latest NFMW two-pot series video, which discusses seed capital, the tax implications of withdrawing from your savings pot, and the potential negative impact on a member’s retirement outcome.

ONLINE REGISTRATION

Members are required to register for online access to facilitate automated withdrawals under the two-pot system, effective from 1 September 2024. To assist with this, the Fund will begin a bulk registration process. Members with correct contact information on record will automatically be registered and will receive an SMS- notification to confirm their registration, including a link to log in to the Sanlam online platform using their ID or passport number.

Please note that the Fund can only register members who have provided the Fund with a valid email address and/or mobile number, which are a requirement for authentication (OTP) purposes.

WATCH TWO-POT VIDEO (EPISODE 2)

QUESTION: If I am a member of both Category C (main fund) and Category A (2%-fund), how is the seed capital determined, and is it possible to make annual withdrawals from both categories?
Seed capital: the accumulated savings in both categories will be combined as one member share for seeding purposes. You will therefore have one seed capital amount of 10% up to a maximum of R30 000 available on 1 September 2024.

Annual savings withdrawals: you will be able to make annual savings withdrawals, once during every tax year from the money available in the savings pots of both your Category C and A funds, with a minimum of R2 000 and no maximum amount. You will be taxed at your marginal tax rate on every savings withdrawal that you make.

QUESTION: As a member of the NFMW’s Category A fund only, with my main fund being another Local Government fund, will seed capital be available in my Category A fund on 1 September 2024, and will I be able to make annual savings withdrawals?
Seed capital: yes, Category A members will be able to access 10% up to a maximum of R30 000 in seed capital available on 1 September 2024. You are also free to access the seed capital amount that will be made available in your main retirement fund.

Annual savings withdrawals: you will be able to make annual savings withdrawals, once during every tax year, with a minimum of R2 000 and no maximum amount. You will be taxed at your marginal tax rate on every savings withdrawal that you make.

QUESTION: If I do not withdraw my seed capital on 1 September 2024, will I still be able to withdraw it at a later date?
Yes. Any money that you do not withdraw from the savings pot, will remain in the pot until such time that you need to access it. The money in the savings pot will continue to grow with 1/3rd monthly contributions and investments returns. Remember, any money that you do not access in your savings pot is payable as a lump sum upon resignation and retirement.

QUESTION: Will any additional administration costs be levied when NFMW processes my savings withdrawal claim (money from the savings pot to be paid to me)?
Yes. Administration cost will be levied to process your savings pot withdrawal claim. This cost will be deducted from the benefit first before tax is deducted.

QUESTION: Am I going to pay tax on my savings withdrawal claim (money from the savings pot to be paid to me)?
Yes. After deducting the administration cost, your benefit will be taxed at your marginal tax rate. Remember, your tax affairs must be in order, as any other money owed to SARS may also need to be deducted before payment is made to you.

QUESTION: How much tax will I pay on withdrawals made from the savings pot?
You will be taxed according to your marginal tax rate. For instance, if your marginal tax rate is 27%, then the tax deduction on your savings withdrawal will be 27% of the amount withdrawn. It is important to note that the more you earn annually, the more tax you will pay. Additionally, be aware that these withdrawals could push you into a higher tax bracket, as they are considered additional income for the tax year, potentially leading to more tax owed to SARS. We recommend watching our video that explains the tax implications of savings withdrawals.

QUESTION: Will I be able to take all my money as a cash lump sum if I resign, after the two-pot system comes into effect on 1 September 2024?
Under the two-pot system, if you resign, you will be able to withdraw the full value of your vested pot, which includes retirement savings accumulated up to 31 August 2024 and any growth thereon. You will also be able to withdraw the money in your savings pot as a lump sum (you can only withdraw if you have not made a withdrawal from this pot in the current tax year or if the remaining value is less than R2000). The money in the retirement pot cannot be accessed until you have reached retirement age.

QUESTION: I was older than 55 on 1 March 2021 and do not want to form part of the two-pot system, do I need to let the Fund know of my decision and how will it affect my options at retirement?
Members who were 55 years or older as at 1 March 2021 have the choice to opt into the system. If they decide not to opt in by 1 September 2025, they will automatically be excluded. You therefore do not need to notify the Fund of your decision to not form part of the two-pot system. You will still have the option to receive all your money as a lump sum at retirement and retain your pre-1 March 1998 tax-free dispensation, if applicable.

QUESTION: What should I do to ensure that everything is in place for the 1 September 2024 two-pot implementation date?
Make sure that your employer and the Fund have your current personal details, including any changes to your surname, contact details, and tax number. Download the ‘Sanlam My Portfolio’-app and register for online access to enable you to make automated withdrawals when the two-pot system becomes effective on 1 September 2024.

Manage your expectations: the funds will not be immediately paid upon submission of an automated withdrawal request. Tax and administrative fees must be deducted first, and your details, including banking information, must be verified before any payment is processed.

REMEMBER WE ARE HERE TO HELP! If you still have questions, please send us an email at info@nationalfund.co.za or message us on WhatsApp at 0662837712.

IMPORTANT NOTICE: The Sanlam MyRetirement application has been replaced with the NEW Sanlam MyPortfolio application to accommodate the new two-pot system. Please uninstall the old MyRetirement app and download and install the new Sanlam Portfolio App from Google Play and Apple App store. The login process remains unchanged.

• Scan the QR code or
• Download the free Sanlam My Retirement App or
• Click here to register

The Fund must have your updated contact information on record for OTP-verification as part of the registration process.