By Samukelo Zwane
What the public response to the two-pot system reveals about SA's retirement industry
South Africa's Two-Pot Retirement System, which came into effect late in 2024, has already triggered noticeable shifts in consumer behaviour when it comes to retirement saving. Introduced to balance long-term preservation with limited pre-retirement access to funds, the system divides new contributions into the two distinct components of a "retirement pot" that remains locked until retirement, and a "savings pot" from which individuals can withdraw money under specific conditions.
FNB's 2025 Retirement Research offers a glimpse into how this particular reform has landed with consumers. The findings show that awareness of the Two-Pot System is relatively widespread, with 69% of survey participants indicating they are aware of it, and 47% of those claiming to be fully informed. However, the depth of understanding varies significantly across income groups. While 83% of the Affluent segment report awareness, 46% of Entry Wallet consumers still have little to no knowledge of the system at all. Despite this disparity in awareness, actual withdrawal rates under the two-pot system are fairly uniform, with around 26% of those saying they are aware of it also indicating that they have accessed funds since the system's implementation.
What consumers are doing with these withdrawals reveals a lot about the current economic realities and the financial pressures many South Africans are facing. According to the FNB study, the most common reasons for withdrawal were to cover day-to-day expenses (48%) and pay off debt (46%). Secondary motivations included education fees (30%), unforeseen expenses (26%) and, for a still notable minority, discretionary spending on holidays (23%) and new appliances (25%). A small but also meaningful group (20%) reported reinvesting their withdrawn funds elsewhere, suggesting either that they are unhappy with the performance of their retirement investments, or that they are simply trying to leverage the system as a liquidity tool.
These FNB findings are echoed in national trends. Within six weeks of implementation, the South African Revenue Service (SARS) reported more than 1.1 million approved withdrawal applications, with R22 billion paid out. By January 2025, over 2.6 million withdrawals had been processed, pushing total disbursements past R43 billion. The South African Reserve Bank has projected that total withdrawals in the initial months could range from R40 billion to R100 billion. This suggests a short-term financial boost for a great many households, but it also raises the potential for negative long-term consequences, especially when it comes to retirement savings adequacy.
From a behavioural perspective, FNB's data shows that withdrawal decisions were not only a consequence of immediate needs, but were also shaped by life stage and income levels. Among those under 60 who hadn't withdrawn, 43% said they wouldn't consider doing so in future, while 31% indicated they likely would. The majority of those in Entry-level segments expressed the intention to withdraw if necessary (38%), whereas Affluent and Wealth respondents were the most resistant to tapping into their savings (65% and 51%, respectively). This aligns with external findings that the bulk of withdrawals have come from individuals with fund credits below R250 000, which typically translates to people and families that are most likely facing immediate financial pressures.
What is abundantly clear is that the success of the two-pot system over time will depend massively on education and behavioural guidance. It is concerning that FNB's research points to a lack of awareness in lower-income groups and confusion about long-term impacts amongst many of those that are aware. This highlights the fact that financial institutions, retirement fund administrators and financial advisers have a key role to play in helping consumers understand not just how to access their money, but whether they should.
