Lessons from two-pot system

WITHDRAWALS: CONSUMERS LEARN - AS DO FUND MANAGERS - HOW THE PROCESS WORKS

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It is now a year after the implementation of the two-pot retirement system that gave pension fund members the opportunity to withdraw some funds from a third of their retirement savings. While it seems consumers learnt how the process works, fund managers also learnt a thing or two.

Stanley Gabriel, executive head of Momentum Savings, says financial services companies braced for a surge in withdrawals from individuals seeking financial relief when the two-pot retirement system came into effect.

"As expected, the numbers were substantial. The Momentum Group alone received 344,898 valid claims with R5.4 billion withdrawn between September 2024 and June this year.

"Interestingly, 8% of claimants cancelled their withdrawals after speaking to their financial advisors, highlighting the critical role of professional guidance."

Gabriel says the withdrawal data provides a clear picture of who accessed their retirement savings and why. Sars' analysis reveals that many claimants were from lower-to-middle-income brackets, with 50% of claimants earning less than R31 000 per month.