The Two-pot retirement system kicking in on Sunday, the first of September. Treasury's acting Tax and Financial Sector Policy Deputy Director-General, Chris Axelson says the two-pot system is meant for people who are in financial distress, ”This is for people who are in distress.

If you take a withdrawal out of a savings pot and your income has been drastically reduced because you need that income, your tax rate will be lower.

The first R95 000($5343,65) will be tax free. If you lost your job and have no other income and then you decide to take some money out of the savings pot then you won't be paying any tax on that amount but if you got a lot of income and you take the money out of the pot, you will be taxed at a higher rate which could be up to 45%.

So this is why we have changed it to try and influence people's behaviour to only really draw it in times of need.”

--ChannelAfica--