South Africans increasingly access retirement savings amid financial strain

SOUTH Africans are rapidly with-drawing funds from their savings pots under the new two-pot retirement system, with many dipping into their savings for a second time in just a few months, according to Natasha Huggett-Henchie, consulting actuary and member of the Actuarial Society of South Africa (ASSA) Retirement Matters Committee.

- DIEKETSENG MALEKE

Retirement fund administrators have reported that 75% of applications for withdrawals in the current tax year are repeat claims, says Huggett-Henchie.

While the average withdrawal amount in the first round of two-pot withdrawals was R20,000, this year’s applications have dropped to an average of R6,000, says Huggett-Henchie.

"We are finding that retirement members are taking all they can as soon as they can, she says.

Introduced on September 1, 2024, the two-pot retirement system was designed to help South Africans access a portion of their retirement savings for emergencies while preserving two-thirds of their pension. The system allows retirement fund members one withdrawal per tax year, as long as their savings pot contains at least R2,000 plus relevant fees.

To start the system, qualifying fund members had 10% of their total retirement savings (up to R30,000) transferred into their savings pots on September 1, 2024. Since then, many have emptied their accounts, leaving them without savings until they can make another withdrawal in March 2026, according to Huggett-Henchie.