Massive two-pot payday for SARS

Sanlam says that it has received over 20,000 savings pot claims via its channels in just the first two working days of the new two-pot retirement system being in place.

The average claim amount remained steady at R20,000 over the two days, equating to an estimated R400 million.

According to Sanlam, over the two-day launch period, the taxman was fully prepared and efficiently processed tax directives.

Only 1% of the tax directive requests had been rejected by SARS, meaning 99% went through and were taxed, raking in millions of rands for the taxman.

For 13% of requests, SARS issued an IT88 — which is where a member has outstanding tax from a previous period or has not submitted one or more annual tax returns for their personal taxes.

These outstanding tax amounts are then deducted from the members’ savings component claim prior to payment to the member.

Huge spike

Sanlam said that the number of claims being processed far exceeds the monthly average of 7,000 to 8,000 retirement, withdrawal or retrenchment claims usually processed by Sanlam Corporate.

It noted the high demand for its systems showed strong interest in the two-pot system and reflected the financial pressures South Africans were under.

“We know that South Africans are struggling financially, given the current economic climate. The number of members resigning or being retrenched from their employers who encashed all or some of their retirement savings increased from 53% in 2022 to 72% in 2024,” it said.

Of these members in 2024, 54% spent their encashed retirement savings on paying living expenses and reducing and settling debt.

“People are using these funds to make ends meet,” the group said.

This is one of the key objectives behind the Two-pot system—to provide South Africans with access to emergency funds when they really need it—though a string of funds have urged members to leave their accessible funds alone, if they can.

Sanlam said that fund members should seek out financial advice to fully understand the impact of the early withdrawals.

Not only because withdrawing the funds might impact their long-term retirement savings goals, but also because early withdrawal would trigger tax processes, where SARS will come after its fair share of the money taken out.

SARS previously warned that withdrawals from the vested component will be taxed at the individual’s marginal tax rate. It has launched a tax calculator for taxpayers to get a better idea of how much will go to the taxman.

Read: SARS already scoring millions from two-pot, and strike warning for the Western Cape