{"id":800355,"date":"2024-11-19T11:00:00","date_gmt":"2024-11-19T09:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=800355"},"modified":"2024-11-19T13:42:15","modified_gmt":"2024-11-19T11:42:15","slug":"r50-billion-drained-from-retirement-savings-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/800355\/r50-billion-drained-from-retirement-savings-in-south-africa\/","title":{"rendered":"R35 billion drained from retirement savings in South Africa"},"content":{"rendered":"\n<p>The South African Revenue Service (SARS) has issued tax directives for nearly R50 billion in two-pot retirement outflows.<\/p>\n\n\n\n<p>Since 1 September 2024, retirement savings in South Africa were placed into two pots.<\/p>\n\n\n\n<p>The savings pot holds one-third of all retirement savings and will be accessible before retirement.<\/p>\n\n\n\n<p>To withdraw from the savings pot, members must have at least R2,000 sourced from a retirement fund, annuity, or preservation fund.<\/p>\n\n\n\n<p>The retirement pot will hold the remaining two-thirds of savings and be accessible upon retirement.<\/p>\n\n\n\n<p>A third vested pot holds all the prior retirement savings until 31 August 2024, except for a maximum of R30,000 used as seed capital in the savings pot and follows pre-existing legislation.<\/p>\n\n\n\n<p>SARS has announced that it has observed an unprecedented and steady increase in tax directive applications, which likely reflects the economic challenges faced by households.<\/p>\n\n\n\n<p>As of 18 November 2024, 2,153,942 directive applications were received and a total of 1,914,306 directives were issued with a total gross value of R35 billion. <\/p>\n\n\n\n<p>The revenue service previously pointed to an amount just under R50 billion, but corrected this later.<\/p>\n\n\n\n<p>The difference between directive applications and directives issued is due to the following rejections:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>169,509 applications were declined for a wide array of reasons, ranging from systems failures from the fund management entities to wrong identification numbers, wrong tax numbers etc.<\/li>\n<\/ul>\n\n\n\n<p><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>41,523 directives were declined because of insufficient funds, wrong codes etc.<\/li>\n<\/ul>\n\n\n\n<p><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>28,525 directives were cancelled by taxpayers who changed their minds.<\/li>\n<\/ul>\n\n\n\n<p>SARS added that its WhatsApp calculator has been used 53,693 times since its implementation, while the simulated calculator on the SARS website, which forms part of the SARS Online Query System, has been used 850,375 times.<\/p>\n\n\n\n<p>SARS added that the success of withdrawals was in large part due to the good cooperation with retirement fund management entities.<\/p>\n\n\n\n<p>SARS Commissioner Edward Kieswetter did, however, warn taxpayers to avoid any actions that could constitute criminality and highlighted the importance of using the correct identity and tax numbers when applying for the benefit.<\/p>\n\n\n\n<p><strong>Money maker<\/strong><\/p>\n\n\n\n<p>The new system is also a good source of funds for the taxman.<\/p>\n\n\n\n<p><a target=\"_blank\" href=\"https:\/\/businesstech.co.za\/news\/finance\/796834\/two-pot-withdrawal-frenzy-in-south-africa\/\" rel=\"noreferrer noopener\">Old Mutual Chief Customer Officer Michelle Acton<\/a> previously warned that South Africans should take a considered approach before accessing their retirement savings.<\/p>\n\n\n\n<p>\u201cThere is no need to rush. The system is here to stay, so take your time to assess whether a withdrawal is the right choice for your financial circumstances,\u201d said Acton.<\/p>\n\n\n\n<p>\u201cMembers should also remember that any withdrawal will be taxed at their applicable marginal tax rate, and an administration fee will apply,\u201d she added.<\/p>\n\n\n\n<p>The tax on the funds is imposed on the withdrawal at a rate ranging from 18% \u2013 45%, depending on their scales.<\/p>\n\n\n\n<p>Kieswetter previously warned taxpayers who understate their income to dodge their obligations to the revenue service.<\/p>\n\n\n\n<p>\u201cSARS is deeply concerned that 213,654 taxpayers have been identified, where they have declared incorrect taxable income, with the view to have a more favourable tax rate,\u201d said Kieswetter.<\/p>\n\n\n\n<p>\u201cIf a taxpayer understates their income, they are intentionally involved in evading their tax obligation. A penalty will be imposed on taxpayers who have understated income.&#8221;<\/p>\n\n\n\n<p>Although Old Mutual does not have any data on how members are using their Two-Pot funds, the company expects members to use their savings for debt repayment (60%), emergencies (23%), and medical expenses (4%).<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>Read<\/strong>: <a href=\"https:\/\/businesstech.co.za\/news\/banking\/800305\/criminal-atm-tactics-making-a-comeback-in-south-africa\/\">Criminal ATM tactics making a comeback in South Africa<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>SARS says that it has issued close to 2 milion directives for the two-pot system, with over R35 billion flowing out of retirement funds. <\/p>\n","protected":false},"author":95,"featured_media":702685,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[26,3246],"class_list":["post-800355","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-headline","tag-sars"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/800355","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=800355"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/800355\/revisions"}],"predecessor-version":[{"id":800450,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/800355\/revisions\/800450"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/702685"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=800355"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=800355"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=800355"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}