Two-pot Retirement
It has been a busy month for the insurance and investment industry to get their systems geared towards the new retirement two-pot system, that comes into effect on the 1st of September 2024.
Some people are very excited about the new savings pot with the option of making annual withdrawals, but there are some things to take note of, namely:
- You have to be a registered taxpayer.
- You must have a valid and active tax number.
- If you owe SARS money, they will first pay themselves and then pay you the amount that is left.
- You will pay income tax on your withdrawals, so if you draw for example R10,000 and you are in the 18% tax bracket, you will only receive R8,200 in your account.
- Making a withdrawal will take some time, so do not expect the money to be in your account soon. All the companies still have some groundwork, and you might only see money in mid-October.
- The minimum withdrawal amount is R2,000.
Short-Term Insurance
Short-term insurance is not always the most fun or sexy topic, but it can be something that can cause a lot of pain and frustration at the claim stage.
One part, in particular, confuses many people is house content insurance, where people tend to under-insure the contents to save on premiums, but they do not know that the insurance company will also pay you the percentage of under-insurance.
Here is a practical example to explain it:
If you insured your contents for R200,000 but it costs R400,000 to replace all your stuff with new things, you are underinsured by 50%, and your insurer will only pay 50% of any claim you make. If you submit a claim for R100,000, you will only be paid 50%, which is R50,000. This is referred to as “the principle of average”.
So, ensure you are adequately covered to avoid disappointment at the claim stage.
Call me if you would like to review your short-term insurance or to get a competitive quote.