What the two-pot system has taught us about the realities of savings

IFinancial services companies braced for a surge in withdrawals from individuals seeking financial relief when the two-pot retirement system was implemented a year ago. As expected, the numbers were substantial: the Momentum Groupopen_in_new alone received 344,898 valid claims with R5.4 billion withdrawn between September 2024 and June 2025. Interestingly, 8% of claimants cancelled their withdrawals after speaking to their financial advisers, highlighting the critical role of professional guidance.

The withdrawal data provides a clear picture of who accessed their retirement savings and why. Analysis by the South African Revenue Service (SARS) open_in_newreveals that many claimants were from lower-to-middle-income brackets, with 50% of claimants earning less than R31,000 per month. This suggests a genuine need for financial relief among a significant portion of the population.

Three-quarters of claimants were between the ages of 30 and 49, a demographic often juggling family responsibilities and debt. More concerning is that nearly 20% of claimants were over 50 years old, nearing retirement. For this group, a withdrawal could have a significantly negative impact on their future pension income, making their financial vulnerability particularly alarming.

The most striking trend is the growing number of first-time claimants in the second withdrawal cycle, with 37% of claims coming from individuals who had not withdrawn before. This indicates that the need for access to funds is not a one-off event for many.

These figures reveal a story that goes beyond simple economics. It speaks to the daily struggles faced by even those who are actively saving for retirement. The two-pot system, while among others designed to prevent resignations for financial access, has become a lifeline. People used this money to pay down education and cell phone debt and even buy food.

While many withdrawals were for genuine needs, some were used for what could be considered "small luxuries" rather than essential expenses. This highlights a critical challenge for the financial services industry: how to support clients in making the best long-term decisions without being paternalistic.

The data highlights the power of financial advice. The fact that many clients chose to cancel their withdrawals after consultation with a financial adviser proves that people are open to guidance, reinforcing the industry's responsibility to educate and remind clients of the long-term consequences of withdrawals, including the impact of lost compound growth, taxes, and fees.

The two-pot system offers a valuable lesson: access to savings is a reality, not a hypothetical scenario. As an industry, we must continue to emphasise the importance of making informed decisions. This means not just advising people not to withdraw, but helping them understand the true cost of a withdrawal and providing clear calculations on what they would need to reinvest to get back on track.

The ultimate goal remains the same: to encourage people to stay invested for the long term. The power of compound growth is the most effective tool for building a secure retirement. The two-pot system should be seen as an emergency relief valve, not a go-to solution for every financial want. By empowering clients with knowledge and support, we can help them navigate these decisions and build a more financially secure future.