Two-pot system: Sars receives 17,964 savings withdrawal applications a day since September 1

The South African Revenue Service says the gross amount of the lump sums applied for in the 'two-pot system' in the past 10 days totals R4.1bn.

The system came into effect on September 1 and enables people to access a small portion of their retirement savings for emergencies before retiring. The bulk of such savings will remain preserved for retirement. 

Between September 1 and 10, Sars received f 161,607 tax directive applications, with 98.9% (159,853) relating to savings withdrawal benefits. This means Sars received an average of 17,964 tax directive applications per day, Sars said in a statement. 

Three reasons given by applicants for withdrawals are a transfer due to divorce, a transfer to a retirement fund, and a withdrawal by a taxpayer. 

Sars commissioner Edward Kieswetter said contributions made to a pension or retirement fund were not taxed at the time of payment to the fund, but were deferred to the time the person retires, resulting in it being taxed at a reduced rate. “Applicants for tax directives are submitted to Sars by the fund administrator via eFiling. The directive indicates to the fund how much tax should be withheld by the fund on behalf of Sars before payout,” he said. 

Kieswetter said taxpayers who owed Sars should realise such debt would be added to the tax on the withdrawal from the savings benefit. “But if there are payment arrangements in place to settle the debt with Sars, this debt will be deducted as per agreement between Sars and the taxpayer. A tax debt that has been deferred will also not be deducted,” he said. 

The turn-around time for Sars to complete directive applications, without any human intervention, was less than 48 hours.

The Government Pensions Administration Agency (GPAA), which administers pension funds on behalf of the Government Employee Pension Fund (GEPF), told TimesLIVE on Wednesday that 63,000 applications for withdrawal have been made since September 1. 

The amounts for the claims differ from person to person and depend on personal choice and what each individual qualifies for or has in their savings pot, said GPAA spokesperson Mack Lewele.

The general trend was that most people claimed for the maximum amount possible, which was an average of R30 000, Lewele said. “We are still in the process of submitting claims to Sars. Suffice to say that similarly to any other pension withdrawal, prior to any payment being made, a tax directive is forwarded to Sars for their determination, based on the individual’s tax profile,” he said. 

However, members of the GPAA using the old version of the app, and not updating to the latest version, could result in the slowness of the system and accessibility challenges. “We also picked up on members who cannot access the app due to incorrect login credentials that require re-registration. Bank particulars must be updated at the employer to allow for submission to the GPAA. Most of those we have received seem to claim the maximum possible,” Lewele said. 

TimesLIVE