Even individuals earning R200,000 per month and above are claiming from the two-pot system, which allows fund members to access up to R30,000 a year from their retirement savings.
The two-pot system makes it possible, for the first time, for people to dip into their savings before they reach retirement age or qualify for early retirement benefits.
Michelle Acton, executive for retirement reform at Old Mutual, said the company had surveyed members who claimed from their savings pot and found that even those in high income brackets were feeling the financial strain.
“South Africans are financially stressed. We’ve all said it, but it really is [the case]. And it’s not income-dependent. When I did the analysis of who was claiming across all income groups, there were people earning more than R200,000 a month claiming from their savings pots.”
When the two-pot system went live on September 1, the retirement savings of each working South African were separated into three pots — a savings pot and a retirement pot, with the third vested pot containing the savings accumulated until August 31. This pot is not subject to new rules, meaning members can claim from it without limit, but withdrawals are capped at a maximum of R30,000 and can only be accessed once a year.
By late January, an estimated R43bn had been drawn from savings pots, with Sars deducting R13bn in taxes, as withdrawals are taxed at a marginal rate.
Speaking at the Institute of Retirement Funds Africa (IRFA) conference in Cape Town this week, Acton said the Old Mutual survey found that 45% of members claiming were withdrawing to pay off debt, 18% to cover school fees, 11% to pay off a bond, and 6% to buy groceries.
The survey received 35,000 responses. “We interviewed members, and [asked]: ‘Will you come claim again across all incomes?’ And the terrifying fact is that over 70% were saying ‘yes, I’m going to come claim again’. People want to pay off debt… but it’s a lot more complicated than that, because … if you speak to banks, they’ll tell you they didn’t see a massive reduction in formal debt.”
Acton said there was a surge in claims on the weekend of March 1, coinciding with the new tax year, although the amounts people were claiming were smaller than usual. “In terms of claim amounts, in the September 2024 to February 2025 tax year, the average amount claimed for our occupational funds was R15,000. However, this has dropped to R7,450 in the new tax year.”
She said many members with low pot values came forward to claim. About 70% of surveyed members across all income levels who already claimed said they planned to claim again. “It is pretty much in line with expectations, not that you could define expectations, because no one had any clue. I think what has been very sad to see is how people have been diving in to claim, even if they don’t know how much has been in there.”
We need a plan that says ultimately, you want to get every South African earning an income in this country, and however they’re earning it, to be able to save a portion that gives them the security when they reach retirement age. That needs to be the ultimate goal in this area
— Michelle Acton, executive for retirement reform at Old Mutual
Citing an example from the UK, which has an auto-enrolment system with very few people opting out, Acton said mid-sized and larger companies could introduce some form of auto-enrolment and phase in smaller-sized firms gradually. “For me, it’s about eating this elephant one bite at a time. There are a few changes we need to make in the formal sector to get the savings there right, and then it’s about how to make savings easier in the informal sector.
“We need a plan that says ultimately, you want to get every South African earning an income in this country, and however they’re earning it, to be able to save a portion that gives them the security when they reach retirement age. That needs to be the ultimate goal in this area.”
Guy Chennells, chief commercial officer at Discovery Corporate and Employee Benefits, said their own data showed a massive spike in the number of first-time claimants when the two-pot system kicked in, but that “came down very quickly”.
He said: “First-time access on your two-pot savings account is pretty stable. I expected that it would drop down almost to nothing, but we see first-time takers at about the same level, month in and month out. It has a slightly decreasing trend, so I don’t know where it would eventually get to.”
He said repeat withdrawals made up most of the spike in claims in March, as the doors opened again in the new tax year. First-time claim values were at about R13,000 across all income groups, but among repeat claimants, the average claim value dropped to about R4,600.
“I’m curious to see whether this flows from the mental behaviour of a bunch of people who were very disappointed at how little they got out of two-pot the second time around. But, certainly, it would have been a shock, compared to the first time.”
Chennells said that without the two-pot system, only 16% of savings would have remained preserved over 40 years. Even if all members drew the maximum permitted amount every year, this percentage jumps threefold under the two-pot system and fourfold if members do not draw repeatedly.
Experts have warned that an average member of a retirement fund would need about 12 times their annual salary to be able to retire at the same living standard they had while working. This requires a contribution of about 15% over 40 years if the member does not withdraw from their savings at all.
Geraldine Fowler, president of IRFA, said retirement funds needed to become responsive to the reality that members no longer regarded them as mere keepers of savings but as custodians of financial stability and capital for sustainable development.
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