Your retirement savings are what you and your family will live on when you stop working, so money taken out now has a cost later. This guide is for you if you belong to a retirement fund and are thinking of taking money from your savings pot. It shows what a withdrawal costs in tax and fees, so you can decide with the full picture.
How the savings pot works
Since 1 September 2024, one-third of the contributions to your retirement fund go into a savings pot and two-thirds into a retirement pot. You can’t touch the retirement pot until you retire. The savings pot is there for emergencies.
You can withdraw from your savings pot once each tax year, which runs from 1 March to the end of February. The minimum is R2,000, before tax and fees. The limit applies to each fund you belong to. For RAs and preservation funds, it applies to each policy.
If you leave a fund, for example when you resign, you can usually take what’s left in its savings pot. This applies even if you’ve already withdrawn that year. Some older RA policies are exempt from two-pot, so check with your fund whether you have a savings pot at all.
What a withdrawal costs
Tax at your marginal rate
SARS adds the withdrawal to your income for the year and taxes it at your marginal rate. None of the tax-free amounts for retirement lump sums apply. So the more you earn, the more of your withdrawal goes to tax.
| Taxable income before the withdrawal | Marginal rate | Tax on a R20,000 withdrawal |
|---|---|---|
| No other income | 0% | R0 |
| R150,000 | 18% | R3,600 |
| R400,000 | 31% | R6,200 |
| R800,000 | 39% | R7,800 |
| R2 million | 45% | R9,000 |
These figures are for the 2026/27 tax year, for someone under 65. The tax on your directive is SARS’s estimate. Your final tax is worked out when you file your return, so you may owe a bit more or get some back.
Fund fees
Many funds charge a fee for each withdrawal. In the FSCA’s 2025 survey of fund administrators, flat fees ranged from R50 to R500, with an average of R278. Some funds charge nothing, and some charge a fee that varies. Ask your fund what it charges.
SARS takes what you owe first
If you owe SARS money, it tells your fund to pay the debt from your withdrawal first. This doesn’t happen if you have a payment arrangement with SARS and you’re up to date with it. A garnishee order, where money is taken from your salary to pay a debt, doesn’t count as a payment arrangement. SARS also won’t issue a directive while you have tax returns outstanding.
Less money for retirement
Every rand you take out now won’t be there when you retire, and it stops growing. Nobody can say how much it would have grown to. But money taken out early loses the most time. Your savings pot does refill, because one-third of future contributions keep going into it.
Assumptions: you’re 40, your taxable income is R400,000 a year and you don’t owe SARS anything. Your fund charges R278, the average flat fee in the FSCA survey, and takes it from the payment. We’ve used the 2026/27 tax tables.
| Amount | |
|---|---|
| Amount withdrawn | R20,000 |
| Less tax at 31% (your taxable income goes from R400,000 to R420,000) | R6,200 |
| Less fund fee | R278 |
| You receive | R13,522 |
The withdrawal costs you R6,478 in tax and fees, just over 32% of what you took out. If you also owed SARS R4,000, with no payment arrangement, you’d receive R9,522.
To end up with R20,000 in your hand, you’d need to withdraw R29,389.
When a withdrawal might make sense
The savings pot was designed for emergencies. A withdrawal can be reasonable when:
- you face a real emergency, such as urgent medical costs, and have no savings to cover it
- the alternative is expensive borrowing that would cost you more than the tax and fees
- you’ve lost your income and need to cover essentials for a short time
It’s harder to justify for things you could plan and save for, such as a holiday or a new phone. Using it to clear debt only helps if you won’t build the debt up again.
What to try first
- Emergency savings. If you have a tax-free savings account, withdrawals from it are tax-free. But you can’t put that money back later without using up your contribution limits.
- Talk to your lender. Ask about a payment arrangement or a lower instalment before you fall behind.
- Check your insurance. Credit life cover on a loan may pay your instalments if you’ve lost your job or can’t work.
- UIF. If you’ve lost your job, check whether you can claim from the Unemployment Insurance Fund.
- Debt counselling. If debt is the real problem, a registered debt counsellor can help you restructure it.
- Cut back or sell. A short-term budget cut, or selling something you don’t need, costs no tax.
How the withdrawal and the tax directive work
- You apply to your fund, using its form, website or app. You must be registered for tax, so check that SARS has your correct details first.
- Your fund asks SARS for a tax directive, an instruction that says how much tax to deduct. It uses a form called the IRP3(a). You can’t apply for this directive yourself.
- SARS works out the tax and any debt to deduct, and sends the directive to your fund.
- Your fund pays you what’s left after tax, any SARS debt and its fee.
Once your fund sends your application to SARS, you can’t cancel it. So check the numbers before you apply. SARS has a free two-pot tax calculator on eFiling, the SARS MobiApp and the SARS Online Query System. The two-pot withdrawal tool on this site also estimates what you’d receive.
This guide is general information to help you understand your options. It isn’t advice for your situation. Figures are for the 2026/27 tax year (1 March 2026 to 28 February 2027) and were checked on 28 September 2026.