The two-pot system could result in more people retiring “very poor”, Old Mutual’s head of financial education, John Manyike, said on Thursday.
Manyike shared the financial group’s two-pot trends as part of its midyear economic outlook.
“It is certainly a concern ... given what we know, that for the longest time, the number of people who can retire adequately in SA has been staggering at 6%, so with this type of early withdrawals, we expect people will retire very poor,” he said.
Manyike said that, since the inception of the two-pot system, Old Mutual has seen withdrawals totalling almost R4bn, of which about R2.8bn reached fund members. The average withdrawal was just more than R12,200.
“It’s not like people are using the savings pot to buy cars. When you ask them, some of them will tell you that they are withdrawing to pay off their debts. However, when you look at the reports from the banking institutions, I don’t think it will confirm the fact that people are paying off their debts.”
Most of those withdrawing are between the ages of 31 and 40, he said, with the highest numbers falling between 36 and 40.
“So people at their prime age are actually withdrawing.”
Regarding income brackets, the majority of people making withdrawals falls within the R5,000 to R10,000 income range, he said.
“So, it’s people who are more vulnerable, people who may be struggling to make ends meet. We’re hoping that indeed, this money is being used for emergencies, as it was intended for.”
Another issue of concern for Manyike is the “ticking time bomb” of youth unemployment, which he said poses serious risks for the future.
SA recorded an unemployment rate of 32.9% in the first quarter, with youth unemployment sitting at 46.1%.
“The economy has not been able to create as many jobs to absorb the youth. The problem with this is that if young people enter the labour market at a very late stage, they’re going to find it difficult to save adequately for retirement.”
This, he warned, would lead to “the highest degree of dependency on the state”.
“Our social spend is not sustainable, because we’ve got fewer taxpayers. If we’re not going to deal with the issue of youth unemployment, we could be facing a much bigger problem at a later stage.”
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