The Two-Pot System for First-Time Workers: Why You Can't Cash Out Your Pension When You Change Jobs

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If your employer has a retirement fund, you'll see a contribution on your payslip every month. Most of what you'll read about the two-pot system is written for people who were already saving before it started on 1 September 2024. It explains how their old savings were divided up.

If you started your first job after that date, most of that doesn't apply to you. Your situation is simpler, and one part of it is stricter:

Two-thirds of everything you contribute is locked until you retire. Changing jobs doesn't unlock it.

The pots, from a new earner's point of view

Since 1 September 2024, every contribution to a retirement fund is split in two:

• Savings pot: one-third. You can make a withdrawal from this pot once per tax year, without resigning.
• Retirement pot: two-thirds. You can't touch this until you retire. At retirement it's generally used to buy a pension, a regular monthly income.

One exception: if you emigrate and stop being a South African tax resident for an uninterrupted period of three years or longer, SARS allows the retirement pot to be withdrawn. (SARS guide)

There's also a third pot, the vested pot, which holds savings built up before 1 September 2024 under the old rules. If you had no retirement savings before that date, you don't have one.

That matters because the vested pot is the only part that can still be taken in cash when someone resigns. Without one, the old habit of "resign and cash out your pension" doesn't work for you.

What happens when you change jobs

Under the old system, many people cashed out their whole pension each time they changed jobs. Under the two-pot rules:

• your retirement pot stays invested until retirement. Resigning doesn't give you access to it.
• your savings pot is still available, subject to the same once-a-year withdrawal rule.

When you change jobs, ask your fund what your options are for moving your savings. Just don't expect a cash payout.

Withdrawing from the savings pot: the rules

• Once per tax year (1 March to 28 February).
• Minimum withdrawal: R2,000. If there's less than that in your savings pot, you can't withdraw yet.
• No maximum, apart from what's actually in the pot.
• Taxed at your marginal rate. The withdrawal is added to your income for the year. There's no tax-free portion.
• You must be registered for tax, with no outstanding returns.
• Tax you owe SARS is deducted first, unless you have a payment arrangement.
• You can't cancel. Once your fund sends the application to SARS, the decision is final.

What a withdrawal really costs

The tax deduction is only part of the cost. The bigger part is the growth you give up.

Say you're 25, earning under R245,100 a year (the 18% tax bracket for 2026/27), and you withdraw R10,000:

• Tax now: about R1,800, leaving you with roughly R8,200
• Growth given up: if that R10,000 had stayed invested for 40 years at a real return of 5% a year (after inflation), it could have grown to about R70,000 in today's money

Illustrative only. Your tax will depend on your total income for the year, and investment returns vary and aren't guaranteed. Your fund may also charge an admin fee for withdrawals, so ask.

There's one more cost that's easy to miss. National Treasury notes that if you leave your savings pot untouched until retirement, it will attract less tax than it does when withdrawn early.

People mean well, and still withdraw

Momentum Corporate found a clear gap between what its members intended and what they actually did. In 2025, 74% of members said they would only use their savings pot in a real emergency. By 2026, only 48% of eligible members hadn't made a withdrawal.

That's not a criticism. Times are tough, and the savings pot exists for hard times. But it shows how easily a safety net can end up being used as a top-up.

When a withdrawal makes sense, and when it doesn't

It may make sense when:

• it's a genuine emergency and your emergency fund is empty
• the alternative is expensive debt, such as a mashonisa loan or a new store card balance

It usually doesn't make sense for:

• holidays, clothes, or Christmas and festive spending
• paying off a low-interest debt
• withdrawing "because it's there"

The takeaway for new earners

Your retirement fund is quietly doing important work. Two-thirds of it is protected from you on purpose. The one-third you can reach is best treated as a last resort, not a savings account. Build a separate emergency fund first (see our guide to emergency funds and tax-free savings), so that a hard month doesn't cost your future self far more than it gives you now.