As South Africa grapples with economic uncertainties and escalating living costs, the newly introduced two-pot retirement system is reshaping the financial landscape for many citizens, reports Cape {town} Etc.
Following its implementation in late 2024, this innovative framework has offered both a lifeline and a challenge, with a significant number of individuals opting to access their savings for everyday expenses.
According to Samukelo Zwane, Head of Product at FNB Wealth and Investments, the two-pot retirement system was designed to strike a balance between long-term financial preservation and the urgent need for liquidity.
It separates contributions into two distinct components: a ‘retirement pot’, which remains locked until retirement, and a ‘savings pot’, allowing for limited, conditional pre-retirement withdrawals. This dual approach aims to help South Africans manage the escalating cost of living while still safeguarding their future.
Insights from FNB’s 2025 Retirement Research reveal that awareness of this two-pot system is relatively high among the population.
Approximately 69% of survey participants reported being aware of the reform, with 47% claiming to be fully informed. However, the understanding of the implications of this system varies widely across different income groups.
While 83% of affluent individuals are aware of the framework, only 46% of those in the Entry Wallet segment possess a comparable understanding. This disparity highlights a critical educational gap that could affect decision-making around retirement savings.
With nearly 26% of informed participants having accessed funds from the system since its launch, the purposes of these withdrawals provide insight into the prevailing economic conditions. The most common reasons for accessing funds included covering day-to-day expenses (48%) and paying off debt (46%).
Additionally, 30% of respondents used their withdrawals to cover education fees, while 26% tapped into their savings for unforeseen expenses. In a striking trend, some individuals utilised funds for discretionary spending—23% for holidays and 25% for new appliances raising questions about consumer priorities in financial management.
Reports from the South African Revenue Service (SARS) echo FNB’s findings, with over 1.1 million approved withdrawal applications resulting in R22 billion disbursed within just six weeks of the system’s implementation.
By January 2025, total withdrawals had surpassed R43 billion, prompting projections from the South African Reserve Bank that initial withdrawals could amount to anywhere between R40 billion to R100 billion. While this influx of cash may offer immediate relief for many households, experts warn of potential long-term ramifications for retirement savings savagely stripped to accommodate short-term fiscal needs.
Behavioural analysis from FNB also indicates that the decision to withdraw is influenced by factors such as life stage and income levels. Notably, among individuals under the age of 60 who had not yet withdrawn from their pots, 43% indicated they would not consider doing so in the future.
Conversely, in the Entry-level segments, 38% expressed intentions to withdraw if necessary, while the wealthier demographics remained more conservative about tapping into their reserves, with 65% of affluent respondents and 51% of wealthier consumers indicating they were disinclined to make withdrawals.
The data clearly illustrates a troubling trend: the bulk of withdrawals is inclined towards those with fund credits below R250,000 primarily individuals and families likely facing strict financial pressures.
This reveals a pressing need for ongoing education and behavioural planning to ensure that the two-pot system achieves its intended outcomes without sacrificing the long-term financial security of individuals.
Also read:
SA’s new two-pot system: How it affects your retirement savings
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