Page 14 - Profmark Tax Guide 2025 Digital

TWO-COMPONENT RETIREMENT FUND SYSTEM

The two-component system became effective on 1 September 2024, consisting
of the following components:

Vesting component
■ Starts with the balance of retirement fund savings on 31 August 2024�
■ Members will not be able to make contributions to their Vested Component
(unless older than 55 on 1 March 2021)�
■ Seed capital, calculated as the lower of 10% of the Vested Component, or
R30 000, is transferred from the Vested Component to the Savings Component�
■ Lump sums are taxed per either the current Withdrawal or Retirement tables�
■ Annuities taxed at marginal income tax rates�
Savings component
■ Seeding finance for Savings Component (maximum R30 000)�
■ An amount of one-third of the retirement fund contributions post 31 August
2024 goes to the Savings Component�
■ It can be accessed without any conditions, but only one withdrawal can
be made during any 12-month period� The minimum withdrawal amount
is R2 000�
■ Withdrawals are taxed at the marginal income tax rates�
Retirement component
■ Individuals will be required to contribute an amount of two-thirds of the
retirement fund contributions post 31 August 2024 to the Retirement
Component”�
■ Cannot be accessed before the retirement date�
■ On retirement date, the total value must be paid in the form of an annuity
(including a living annuity)�
■ Annuities taxed at marginal income tax rates�
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