Can I withdraw from my provident fund while employed?

Yes, but the rules depend on when you started contributing to your provident fund. The introduction of the two-pot retirement system on 1 September 2024 created new guidelines for provident fund withdrawals, with different rules applying to existing and new savings.

Understanding your provident fund pots

If you were a member of a provident fund before 1 September 2024, your savings are divided into three components:

1. Vested Pot: This contains all your savings from before 1 September 2024, minus the seed amount. The original withdrawal rules still apply - you can make one withdrawal before retirement if you're still employed.
2. Savings Pot: On 1 September 2024, 10% of your existing savings (up to R30,000) were automatically moved into this pot. Any new contributions after this date are also split between the savings and retirement pots.
3. Retirement Pot: This contains the remainder of your pre-September 2024 savings and a portion of your new contributions. This money stays invested until retirement.

If you joined a provident fund after 1 September 2024, your contributions are simply split between the savings pot and retirement pot.

How can you access your savings?

For the Vested Pot:

• You can make one withdrawal while employed
• This follows the same rules as before the two-pot system
• Once withdrawn, you cannot access this pot again until retirement

For the Savings Pot:

• You can make one withdrawal per tax year (March 1 to February 28/29)
• Minimum withdrawal amount: R2,000 (no maximum limit)
• This is available for any reason, though it's designed for financial emergencies

Common reasons for considering a withdrawal might include:

• Unexpected medical expenses
• Critical home repairs
• Family emergencies
• Natural disasters
• Legal emergencies

Understanding the costs

Before making a withdrawal, consider these important financial implications:

1. Tax Impact: Your withdrawal will be taxed at your marginal income tax rate. This means it's added to your annual income, which could push you into a higher tax bracket for that year.
2. Administrative Fees: Each withdrawal incurs a R300 administration fee (excluding VAT) at 10X Investments.
3. Long-term Effects: Any withdrawal reduces your retirement savings and the potential compound growth you could have earned on that money over time.

Making an informed decision

Before withdrawing from your provident fund, we recommend:

1. Using our Two-Pot Calculator to understand the impact on your retirement savings
2. Considering alternative sources of emergency funding
3. Consulting with a tax professional about the implications for your specific situation

Need help understanding your options?

Try our Two-Pot Calculator to see how different withdrawal scenarios could affect your retirement savings. Our investment consultants are also available to help you understand the implications of withdrawing from your provident fund.