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Two-pot withdrawal fees: questions for the board, not the press release

Scrutiny of savings-component withdrawal fees — survey observations, not a regulated tariff.

Topics · ~8 min · Education only

What is knowable from FSCA and SARS — tax, admin fees, directive rails

FSCA materials are clear that savings-component withdrawals can attract admin fees and are taxed at the member’s applicable (marginal) rate. SARS stresses tax registration, the directive process, outstanding returns that can block directives, and that SARS debt may be withheld. The SARS calculator is illustrative — do not invent a member’s net payout here.

We do not tell members whether to withdraw. “Two-pot withdrawals are tax-free” is false. This checklist stays on board scrutiny of fees and process.

FSCA costs-and-fees survey — evidence for questions, not a legal tariff

FSCA surveyed industry costs and fees after implementation (Communication 33 / Information Request 2 of 2024 (RF)) and published dispersion, recovery methods and cross-subsidy findings. Those bands are survey observations, not a regulated maximum. There is no primary capped tariff in the materials this packet locked. Do not write “the law sets a maximum of Rx.”

As survey observations only: flat savings-withdrawal transaction fees in responses clustered roughly R50–R500 (report average about R278; median band described around R250–R350). A June 2024 FSCA slide used an illustrative R500 admin cost in a worked example — that is an illustration, not “FSCA requires R500.” Do not say FSCA approved any named administrator’s fee.

Cross-subsidy, channel pricing and base-fee uplift — what the pack should show

FSCA states cross-subsidisation between withdrawing and non-withdrawing members ideally should not be happening, yet finds clear cross-subsidies depending on methodology. Boards should know whether electronic versus manual channels are priced differently, and whether any base administration fee increase attributed to two-component costs sits beside the withdrawal line — not only the transaction fee.

Your SLA and fee schedule are the source for this fund. The survey average is not a legal benchmark funds “must” charge.

Section 7C as the reasonableness lens (FSCA’s framing)

FSCA frames scrutiny of this fee class against section 7C member-interest duties — boards should be able to show they considered fee reasonableness against demonstrated cost drivers (systems, staffing, fraud controls, channel mix).

That is not a rewrite of the general duty explainer. It is the reasonableness lens FSCA uses for savings-withdrawal fees. Future Conduct Standards on admin fees, if any, are not current law here — unverified; do not invent.

Checklist — scrutiny without price advice

• This fund’s savings-withdrawal fee (rand or %, if any) located in rules/SLA/fee schedule; deduction from the savings component confirmed or flagged.
• Board minute: fee considered against s7C member-interest duties and against demonstrated cost drivers (systems, staffing, fraud controls, channel mix).
• Cross-subsidy between withdrawing and non-withdrawing members (or electronic vs manual channels) identified — intentional, disclosed, defensible?
• Before members commit: pack/comms show split between gross withdrawal, SARS tax/debt, and fund/admin fee.
• Consistency across participating employers/fund sections — or negotiable by arrangement — known to the board.
• Outliers relative to FSCA survey bands discussed as governance heat, without treating the survey average as a legal benchmark.
• Stated review cadence for withdrawal fees after volumes stabilise.
• Any base administration fee increase attributed to two-component costs visible alongside transaction fees — not only the withdrawal line.

Questions to table (survey bands are observations; your SLA is the source)

• What rand or % fee (if any) does this fund charge on a savings-component withdrawal, and where is it documented?
• Has the board minuted s7C reasonableness against cost drivers — not a press-release number?
• Is any cross-subsidy intentional, disclosed, and defensible?
• How are members shown the split between gross withdrawal, SARS tax/debt, and admin fee before they commit?
• Do not treat the FSCA survey average (~R278) or R50–R500 cluster as a legal tariff; do not invent a regulated cap; do not advise members whether to withdraw.