South Africa’s two-pot retirement system allows workers limited access to retirement savings, but repeated withdrawals could significantly reduce the amount available when they retire.
South Africans who regularly dip into their retirement savings under the two-pot system could be giving up more than they realise, with one analysis estimating that repeated withdrawals could leave an employee with about R1 million less at retirement.
According to an analysis by Paymenow Reward and Benefits Lead Advisor René Richter, an employee earning R30,000 a month who withdraws the full savings-component allocation every year for 30 years could receive R399,600 in after-tax cash, but retire with about R1.01 million less than if the money had remained invested.
The two-pot retirement system, introduced in September 2024, allows retirement fund members to access money from a savings component once per tax year, while keeping the bulk of their retirement savings protected until retirement.
The system was designed to give employees access to cash during financial emergencies without forcing them to resign or cash out their retirement funds.
