As a Discovery Bank client, you can now seamlessly track and manage your Discovery Retirement Fund portfolio in your banking app. Learn how to view your balances, find tips on using your two-pot savings, and check our handy calculator to see how withdrawals could impact your financial future.
Have you heard about South Africa's two-pot retirement system, but aren't sure how it works and if it affects your financial planning? Here's a quick breakdown, plus ways in which Discovery Bank is making managing your savings and investments more convenient than ever.
Understanding South Africa's two-pot system
South Africa's two-pot system gives citizens with retirement funds a new way to manage their savings. As of 1 September 2024, your retirement contributions are split into two parts: one third goes into a savings pot, which you can withdraw from once a year, and the other two thirds go into a retirement pot, which stay locked until you retire.
The goal of this system is to encourage long-term savings while still giving access to some funds in case of emergencies, so people aren't tempted to quit their jobs just to access these funds. Hopefully, this flexibility will help ensure more South Africans are financially secure when they retire.
Track your two-pot savings with Discovery Bank
As you know, Discovery Bank clients can already view all their Discovery products in the Discovery Bank app. As part of our commitment to offering you seamless access to all your financial information in one place, our new integration now lets you track your Discovery retirement portfolio and securely manage your two-pot savings too!
If you're a member of the Discovery Retirement Fund, you can view your savings pot and retirement pot balances at any time in your banking app. This means you'll always know exactly how much you have available to withdraw from your savings pot, if needed, and how much is preserved for your retirement.
How to manage your two-pot retirement savings in your app
Managing your retirement savings is quick and easy. Simply:
- Log in to your Discovery Bank app.
- Tap Accounts at the bottom of your home screen.
- Scroll down and tap Pension Portfolio.
- Tap the relevant tile to view balances or withdraw.
We encourage you to preserve your retirement savings, but if you must make a withdrawal, it's now easier than ever.
You can submit requests in the banking app in under 60 seconds. Money will be deposited securely into a linked Discovery Bank account within three business days, following SARS clearance.
Three tips to manage your two-pot savings wisely
While the two-pot system lets you access your savings before retirement, it's important to be cautious when making withdrawals. Here are a few tips to help you manage your savings responsibly:
1. Calculate the cost: The longer your funds stay invested, the more it benefits from compound interest, so withdrawing from your savings pot can reduce your retirement savings growth. Use the two-pot calculator here to make sure you're still adequately covered for retirement and develop a plan to make up the gap, if needed.
2. Explore your options: Given how a withdrawal might affect your long-term retirement security, see if there are any other assets you could use instead of this savings pot. If you need ideas on how best to free up some funds, consult a financial adviser to run the numbers on your options. If you don't yet have an adviser, you can leave your details and one will call you back.
3. Consider the tax implications: Remember that withdrawals from your savings pot are subject to tax at your marginal rate, which could be anywhere from 18% to 45%, depending on your income. Ensure your withdrawal is worth it!
Learn more about Corporate and Employee Benefits
Want to explore more about the two-pot retirement system and how Discovery's Corporate and Employee Benefits can help you plan for the future? Educate yourself with these articles and check some FAQs here.