ATM President Vuyo Zungula has reiterated his argument that the Two-Pot system will push many workers into a deeper debt spiral, “primarily due to the hidden taxes and administrative fees associated with such withdrawals.”
He warned that workers may find themselves facing substantial tax liabilities not only from the withdrawal itself but also from potential increases in their taxable income brackets.
The implementation of the government’s Two-Pot retirement system takes effect today, on 1 September 2024.
The South African Revenue Service (SARS) announced on Saturday that workers can now access the Two-Pot retirement system calculator.
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According to SARS, the calculator aims at assisting pension fund members with an illustrative amount of what they can possibly expect as a payout. “All relevant and accurate information must be provided to get a clear estimate of the payout,” said the revenue collector.
However, Zungula maintained that the current limit on pension withdrawals – capped at R30,000 – is insufficient to alleviate the financial burdens faced by the workers.
“The ATM firmly believes that the R30,000 cap is inadequate for addressing the overwhelming indebtedness that many workers face. This limit fails to provide meaningful relief and instead serves to perpetuate a cycle of poverty and financial instability.
“The promise of accessing retirement savings has been overshadowed by the harsh realities of taxation and fees, effectively trapping workers in a situation where they are worse off than before,” he said.
Zungula called on Parliament to revise the maximum withdrawal cap of the Two-Pot system, suggesting workers be allowed to access one-third of their pension savings “without the onerous restrictions currently in place.”
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