Advice before you cash in

People may be unable to take allin some instances.

- Ina Opperman

I f you are one of the consumers waiting for 1 September to withdraw from your savings pot under the new two-pot retirement system, you have to keep in mind that the taxman can erode the amount you get out, while there will also be other costs such as administration fees.

You could even be restricted from withdrawing at all in some instances.

Vickie Lange, head of best practice at Alexforbes, says the two-pot retirement system will provide a balanced solution by addressing retirement fund members' needs for longer-term financial security and short-term financial relief.

"It is likely that the two-pot retirement system will improve new members' retirement outcomes by 2 to 2.5 times compared to those under the current system, given the requirement to preserve their retirement pots fully before retirement.

"This change is important because the main reason for members not being able to afford to retire is because only one in 10 members preserve their retirement savings when changing jobs." With the two-pot retirement system, when members unexpectedly need access to cash for financial relief due to emergencies or unplanned expenses, such as medical costs or education fees, they will have the option to make limited cash withdrawals if they have more than R2 000 in their savings pot before retirement without resigning.