Danger of using two-pot for emergencies

Although the two-pot retirement system gives pension fund members access to their retirement savings, using that money for emergencies is dangerous.

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Traditional financial advice recommends maintaining an amount equal to three months' worth of expenses in an emergency fund. However, inflation erodes the value of cash, making it challenging to keep pace with rising costs.

Therefore, some people consider placing emergency savings in tax-deductible retirement fund vehicles to benefit from potentially higher returns, especially with the flexible access options provided by the new two-pot system.