Can I get my money back if I cancel my retirement annuity?

A Retirement Annuity (RA) is designed as a long-term investment for your retirement, not a typical savings account. While you can't "cancel" an RA to get all your money back, there are specific circumstances under which you can access some of your funds.

Your options under the Two-Pot System

Under the current two-pot system (implemented in September 2024), your RA funds are divided into three components, each with different access rules:

The Savings Component: This portion allows one withdrawal per tax year, even if you're under 55.

Key points:

• Minimum withdrawal amount: R2,000
• Withdrawals are subject to income tax at your marginal rate
• An administration fee applies to withdrawals
• You'll need to maintain at least R2,000 in this component to make a withdrawal

The Retirement Component: This portion is preserved until retirement age. You cannot access these funds earlier, as they're specifically meant to provide for your retirement years.

The Vested Component: This contains your pre-September 2024 savings. A portion (10%, capped at R30,000) has been moved to your savings component, while the rest remains preserved until retirement.

Important restrictions

Several circumstances might prevent you from making withdrawals, including:

• Having a pension-backed home loan
• Owing your employer for misconduct or theft
• Having a pending divorce order
• Owing maintenance payments

At retirement age

When you reach retirement age (typically 55 or older), you can:

• Take up to one-third of your savings as a lump sum (subject to tax)
• Use the remaining amount to purchase an annuity that provides regular income

Understanding the impact

Early withdrawals can significantly reduce your retirement savings. What might seem like a relatively small withdrawal today could mean substantially less income in retirement due to the loss of compound growth over time.

You can stop making contributions to your RA at any time without penalty, but keeping your money invested gives you the benefit of long-term compound growth.

Our Two-Pot Calculator can help you understand how different withdrawal decisions might affect your retirement savings.