Association warns of long-term tax costs in new retirement system

VAAL TRIANGLE - The Association for Savings and Investment South Africa has warned the new two-pot retirement system's provision for accessing savings in financial distress carries significant tax implications. Withdrawals are taxed at the marginal rate, potentially escalating members into higher tax brackets. The association highlights an example in which withdrawing R80,000 could incur an additional R21,275 in taxes. Long-term impacts include forfeiting substantial investment growth, with R80,000 withdrawn at age 40 potentially costing R121,958 in future value by retirement age, without accounting for inflation.

PHOTO: (Supplied)