By Rachel Mohamed
The Public Servants Association (PSA) warned its members against unnecessary withdrawals from their pension funds under the two-pot system. While the system offers greater flexibility and access to retirement funds, the PSA emphasized the potential long-term impact of such withdrawals on retirement savings.
Speaking on VOC’s Breakfast Show, Claude Naiker, Acting Deputy General Manager at the PSA, explained the financial and tax implications of early withdrawals from pension funds within the system.
“As the PSA, we cannot overemphasize or underestimate the detriments and effects of withdrawing from the savings component of pension funds at this stage,” Naiker said. “Pension savings are intended to support you during retirement. Drawing from your pension now could be detrimental.”
Naiker outlined key conditions for withdrawing from a pension fund.
“First, you must be tax compliant and registered as a taxpayer. Second, if you have not filed tax returns, SARS will issue a tax directive, preventing withdrawals. Third, if you owe SARS, withdrawing could leave you with less than expected, as the amount is considered income.”
Listen for the full interview:
VOC News
Photo: Pixabay
