Not a quick-fix solution

TWO-POT: RETIREMENT SYSTEM IS A TOOL FOR FINANCIAL FREEDOM, CONSUMERS WARNED

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Although the implementation of the two-pot retirement system seems like manna from heaven for cash-strapped consumers, insurance providers and financial institutions worry about its impact on consumers' short-term and long-term decision-making.

They say consumers must remember that the two-pot retirement system is a tool for financial freedom, not a quick fix.

Mark Sanders, COO of GIB Insurance Brokers and Glenn Gamsy, MD of financial services at GIB, say while the two-pot retirement system offers much-needed relief amid the widespread financial uncertainty, high cost of living and mounting debt in South Africa, there is reason for concern among insurance providers and financial institutions.

Now more than ever, Sanders says consumers must take a strategic approach to their financial planning, particularly when it comes to insurance.

"Since the implementation of the two-pot retirement system in September, financial services providers already received claims totalling over R21 billion. While it is understandable that many consumers are prioritising short-term financial pressures, this can lead to decisions that may compromise their long-term financial security," Gamsy says.