What happens if I get fired after 1 September 2024 when the new retirement laws come into effect?

The long answer

If you get fired after the new retirement laws come into effect after 1 September 2024, you will be able to withdraw any funds you have saved before 1 September 2024. That money is called your “vested pot”. 

If you withdraw what you have saved from your vested pot, you will pay tax on the lump sum. Only the first R27,500 is tax free. After R27,500, these are the SARS figures for how a lump sum withdrawal will be taxed in the 2025 tax year (1 March 2024 – 28 February 2025) which SARS says are unchanged from the 2024 tax year: 

But from 1 September 2024, if you are still in your job and you continue to make contributions to your provident or pension fund, those contributions will go into two pots: your savings pot and your retirement pot. One third of your contribution will go to your savings pot and two-thirds to your retirement pot. 

You will not be allowed to withdraw any money from the retirement pot until you actually retire, and then the money in the retirement pot will be used to buy you a monthly pension or annuity. But you can make a yearly withdrawal of not less than R2,000 from the savings pot in every tax year. 

News24 says that this is what you will be able to access when you resign, are retrenched or dismissed after the new system comes into effect on 1 September 2024: 

Vested pot (savings before 1 September 2024) 

You can take what is in your vested pot in cash if you need to do so, if you are without work and need the money. 

Savings pot 

You will also be able to withdraw the savings that are in your savings pot, as long as you have not already made a withdrawal in that tax year. The exception is if your savings pot is less than R2,000. If that is the case, you will be able to take it in cash even if you have already withdrawn during the tax year. 

When you retire, lump-sum withdrawals from the savings component are taxed according to the retirement fund lump-sum benefits table. The first R550,000 is tax-free. 

Moonstone Information Refinery explains that you will not be able to withdraw the money in the retirement pot before you actually retire, even if you are retrenched or fired. If you are retrenched or fired, you will have access to the money in your savings pot, and if you have not withdrawn it already, your vested pot. Remember that you will still keep all your rights to access the savings you made before 1 September 2024. (the vested pot).

Wishing you the best,
Athalie