The two-pot system could provide R40 billion to the fiscus. Picture: Freepik
More than R21 billion has been paid out to South Africans who applied and withdrew from the savings withdrawals benefit of the two-pot retirement system.
According to the South African Revenue Service (Sars), a total gross lump sum of around R21.4 billion has been paid out to taxpayers in the last two and half months.
The utility noted, over 1.2 million South Africans applied for the tax directive and around 1.14 million were approved.
According to Sars, these were the main reasons if your withdrawal was declined:
- incorrect identity numbers
- incorrect tax numbers.
“Sars reminded taxpayers, who want to apply for a withdrawal to make sure that they verify their tax numbers, have supplied the correct identity numbers, and that they do not have any outstanding debt with Sars,” the revenue service said.
“After a registered taxpayer has applied, a successful tax directive informs the fund management how much tax to deduct from a withdrawal.
“Directive applications are accepted by Sars 24/7 and processed within an hour, 365 days a year from 8am to 7pm. Unless a directive application is submitted outside of these hours, the response, if the taxpayer is compliant, will be sent to the fund within an hour,” Sars said.
The taxman further explained that South Africans who owe Sars money may have some of their funds deducted during this withdrawal process if a payment arrangement has not been finalised beforehand.
“Before a final amount is paid to the applicant, the pension fund will be informed to also deduct any outstanding debt on behalf of Sars before any payout is made to the member. If a person has a debt arrangement with Sars, the withdrawal will not be affected,” the revenue service said.
Chantal Marx, head of investment research at FNB Wealth and Investments said in September that the two-pot withdrawal system could have a major impact on South Africa’s consumer confidence.
The impact of the two-pot system will in turn have a positive impact on domestic retailers, particularly discretionary names (clothing and furniture mainly), Marx added.
Marx estimated that about R40 billion would be withdrawn from pension assets.
“While this is a chunky figure, it is less than what is typically lost in early access every year, although this is anticipated to still be a factor but to a much smaller extent,” he said.
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