Two-pot lessons from abroad

PENSION: 'ABILITY TO WITHDRAW FROM THE SAVINGS POT CAN BE DOUBLE-EDGED SWORD' »> Rise in withdrawals mirror 'global tensions between financial relief, future security'.

- Ina Opperman

GROWTH VERSUS SAVING. There are concerns that annual withdrawals from the two-pot will leave members with too little money to retire on.

(Picture: iStock)

South Africa implemented the two-pot retirement system in September 2024 and until now pension fund members have withdrawn more than R60 billion.

While this amount bought relief for many families, there are concerns that annual withdrawals will leave members with too little money to retire on.

How did it work in other countries?

Mike Adsetts, global chief investment officer at Momentum Investments, said September marks one year since the implementation of the two-pot retirement system, a reform aimed at balancing people's need for long-term retirement savings with their immediate financial needs.

"This dual-purpose framework, which allows partial access to your retirement savings while preserving the majority for retirement, brings South Africa in line with a global trend," said Adsetts.

"While the two-pot retirement system is new to our shores, many countries have navigated similar reforms, offering valuable insights into potential pitfalls and best practices.

"By examining international retirement models, we can better understand how to ensure the two-pot retirement system delivers sustainable, positive investment outcomes for South Africans."

Adsetts said South Africa is not an outlier when it comes to reforming its retirement system.

"The challenge of striking a balance between liquidity and preservation is a universal one."