Dear valued NFMW member,

It has been just over a month since the implementation of the two-pot retirement system. The Fund is pleased to share significant updates and essential reminders to help you make informed decisions about your retirement savings.

More than R274 million already paid in two-pot claims

As at 1 October 2024 the Fund has processed and paid out R274 489 000 in two-pot claims to over 12 000 members. With an efficient processing and payment timeframe of just 5 to 10 working days, we provide timely support for members accessing their funds.

To facilitate the two-pot automated withdrawals, we have actively engaged with employers to obtain members’ banking details, which is a requirement for members to be able to complete the savings withdrawal. Where employers did not provide this information, the Fund implemented alternative measures to ensure these details were updated. We are pleased to report that we have successfully updated banking details for over 81% of our members, allowing more than 45 000 members to submit and complete their withdrawal applications conveniently via the Sanlam My Portfolio application. Please refer to the video below that provides a step-by-step guide on how to register and complete the two-pot withdrawal application.

As you navigate the new system, it is crucial to keep both short-term and long-term impacts in mind:

Short-term considerations

• Tax implications: An admin fee of R379.50 is payable, and you will be taxed at your marginal tax rates on withdrawals made from the savings component. The withdrawal, which is seen as an additional income received for the tax year, may also push you into a higher tax bracket, so be mindful of potential tax changes. Any outstanding amounts owed to SARS, will be deducted before payment is made to you.
• Impact on retirement savings: Withdrawing from your savings component could reduce your future retirement savings by impacting compound interest over time.

Long-term considerations

• Reserve for emergencies: It is advisable to reserve access to the savings component strictly for emergencies to protect the value of your retirement savings.
• Cashing out after employment: If you are considering withdrawing from the vested component upon leaving employment, consider the tax implications and potential effect on your retirement outcomes.
• Preservation of retirement component: When changing jobs, the retirement component must be preserved. Ensure you manage and track your preserved values to maintain a secure financial future.

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2- Contribution allocation from 1 September 2024: The savings component will grow with one-third net contributions and investment returns, while the retirement component will grow with two-thirds net monthly contributions and investment returns. No further contributions will be made to the vested component, but it will continue to earn investment returns.

3- Section 37D deductions, such as housing loan guarantees and divorce claims, will be allocated proportionately across all three components.

4- Ending service younger than the age of 55: If you resign, are dismissed, or retrenched, you will be able to withdraw the full value of your vested component, which includes savings accumulated up to 31 August 2024 and any growth thereon. You will also be able to withdraw the money in your savings component as a lump sum (withdrawals can only occur if you have not made a savings withdrawal from this component in the current tax year, or if the remaining value is less than R2 000.). The benefit is subject to tax.
NB! The money in the retirement component can only be accessed as an income at retirement.

5- At retirement (ending service 55 years and older), the benefit is payable as follows:
Vested component:

• Old Money (vested benefit): This includes all contributions made to the Fund before 1 March 2021, as well as any interest or growth accumulated on those contributions. This amount is payable as a lump sum.

• New Money (non-vested benefit): This refers to contributions made to the Fund between 1 March 2021 and 31 August 2024, along with the interest or growth on those contributions.

  • 1/3rd can be taken as a lump sum.
  • *2/3rds must be taken as an annuity/pension.

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Savings component: Any benefits left in the savings component at retirement can be taken as a cash lump sum. Alternatively, it may be transferred to the retirement component at retirement and taken in the form of a compulsory annuity/pension.

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*Retirement component: 100% of the benefits in the retirement component must be taken in the form of a compulsory annuity/pension at retirement.

*Exception: You may take a cash lump sum if the total value in the retirement component plus two-thirds of the non-vested (“new money”) benefit in the vested component does not exceed R165,000 (the de minimis amount as prescribed in the Income Tax Act).

Sanlam will be hosting an Imali Zam session where experts will revisit the basics of the two-pot system, the associated misconceptions and unpack some important themes including:

• admin and system issues
• submitting an emergency savings withdrawal
• tax implications

Date: 17 October 2024
Time: 12h00 to 13h00

Secure your spot by clicking on the link the below.

The NFMW’s excellent latest and long-term investment portfolio returns as at 30 September 2024 are provided below.

	3 months	1 year	3 years Ann	5 years Ann	10 years Ann
Shari’ah Portfolio	4.21%	9.58%	5.79%	9.35%	6.72%
Capital Protector	3.27%	11.23%	8.05%	6.97%	7.38%
Stable Growth	8.10%	23.25%	11.55%	8.55%	10.03%
Capital Growth	6.53%	21.14%	10.95%	10.33%	8.85%
Aggressive Growth	6.18%	20.32%	10.85%	10.63%	8.71%
CPI (inflation)	1.21%	4.47%	5.77%	5.05%	5.00%