Explore how the two-pot retirement system is influencing South African households to withdraw savings, and the potential long-term implications for financial security.
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South Africans are increasingly returning to their retirement savings to cope with ongoing financial strain, raising fresh concerns about long-term financial security in the era of the two-pot retirement system, says Therese, head of wealth management at Momentum Financial Planning (MFP).
She says since its implementation on September 1, 2024, the system has given fund members access to a portion of their retirement savings without needing to resign. While this has offered short-term relief to many households, new data suggests it may also be entrenching a pattern of repeat withdrawals.
Groblersays early trends point to a more complex reality than initially anticipated: “The conversation around South Africa’s two-pot retirement system has largely centred on one key feature: access”.
She says as the system evolves, a more nuanced picture is starting to emerge.
Figures from Momentum Corporate FundsAtWork show that in the first week of March 2026 alone, coinciding with the new tax-year withdrawal window, more than 30 500 claim requests were submitted. Notably, a significant share of these came from individuals who had already accessed their savings before.
This repeat behaviour, Grobler says, suggests that many South Africans are beginning to treat the savings pot as a financial buffer rather than a once-off emergency measure.
She says the trend is particularly pronounced among individuals aged 31 to 45, as well as those earning between R90 000 and R180 000 annually, a segment often described as the “squeezed middle”, balancing debt, living costs, and family responsibilities.
Broader industry data support this picture. According to the South African Reserve Bank’s Quarterly Bulletin and household finance data, consumer finances remain under sustained pressure, with rising debt-service costs and limited disposable income leaving many households vulnerable to shocks. At the same time, research by the Association for Savings and Investment South Africa (Asisa) has consistently shown that a large proportion of South Africans are not on track to retire comfortably, even before the introduction of the two-pot system.
Against this backdrop, the accessibility of retirement savings is proving to be both a relief mechanism and a potential risk.
Small withdrawals, big implications
Momentum’s data reveals that 71% of recent claims were for amounts below R10,000, a sign that withdrawals are often being used to cover day-to-day expenses rather than major financial emergencies.
Grobler cautions that this points to a critical behavioural shift.
“These smaller withdrawals often go towards day-to-day expenses rather than resolving longer-term financial challenges. In the moment, it can be difficult to tell the difference between what feels urgent and what is essential," she says.
While the amounts may appear modest, their cumulative effect can be significant, particularly when combined with tax implications and the loss of compound growth, she says..
The hidden cost of access
According to Grobler, withdrawals from the savings component are taxed at an individual’s marginal rate, meaning that the actual amount received can be substantially lower than the amount withdrawn.
Beyond this immediate impact lies a longer-term cost: the erosion of compound returns, she says.
Momentum modelling shows that a 30-year-old earning R20,000 a month who withdraws their full savings component annually could see their retirement income reduced by up to a third.
This underscores a key concern among financial planners, that repeated access, even in small amounts, can materially alter retirement outcomes over time, she says.
A growing pattern of dependency
“One withdrawal may feel manageable. But over time, repeated withdrawals can start to erode retirement savings in a meaningful way,” Grobler explains.
The rise in repeat claims indicates that withdrawals are increasingly being driven by persistent financial pressure rather than isolated emergencies.
Economists point to a combination of factors behind this trend, including high inflation in essentials such as food, electricity, and fuel, as well as slow income growth. For many households, there is little room to build alternative safety nets, making retirement savings one of the few accessible sources of liquidity.
Building resilience beyond retirement funds
“In a challenging economic environment, it is understandable that people look to available savings to manage immediate demands, but long-term resilience is usually built through structure rather than reaction,” says Grobler.
She highlights the importance of emergency savings and appropriate risk cover as key buffers that can reduce reliance on retirement funds.
This view aligns with findings from Asisa, which emphasise that emergency savings remain one of the weakest areas of personal finance in South Africa, leaving many consumers exposed when unexpected costs arise.
The role of financial advice
Grobler adds that one of the most overlooked aspects of the two-pot system is the role of financial advice before making a withdrawal.
“The decision to withdraw is often made under pressure. Engaging with a financial adviser before making that decision can help bring clarity. It allows individuals to understand the full impact of withdrawing, consider alternative options, and make a more informed choice based on their broader financial position,” she says.
While accessing the savings pot may still be necessary in some cases, she notes that alternatives may exist that do not compromise long-term financial outcomes.
Balancing today and tomorrow
The two-pot system was designed to strike a balance between preservation and accessibility, a policy shift aimed at reducing the need for premature resignation while improving financial flexibility.
However, as usage patterns evolve, it is becoming clear that access alone is not enough to ensure better financial outcomes.
“The two-pot system provides flexibility, and that flexibility is valuable. But it also places greater responsibility on individuals to make decisions that balance immediate needs with future security,” says Grobler.
PERSONAL FINANCE