Here’s what people used it for

Although authorities applied the two-pot retirement system in September final yr to assist South Africans get entry to their retirement financial savings in emergencies, evidently not everybody who withdrew cash used it for an actual emergency.

According to the 2025 FNB Retirement Insights Survey, performed amongst a pattern base of 1 041, consciousness of the two-pot retirement system is now widespread, with 69% of respondents indicating they’re acquainted with it, with 47% feeling totally conscious, whereas 22% stated they know just a little about it, 15% have heard of it, however have no idea what it means and 16% know nothing about it.

Samukelo Zwane, product head at FNB Wealth and Investments, says the excellent news from the survey is that precise withdrawal charges from financial savings pots beneath the two-pot retirement system stay comparatively low at simply 26% and solely 26% of those withdrew R20 000 or extra, pushed by the rising prosperous market.

ALSO READ: Two-pot retirement system: Almost 4 million withdrawals near R57 billion

Reasons for two-pot retirement system withdrawals

He says the principle causes that individuals withdrew funds had been to cowl each day residing bills and handle debt. “This cautious strategy is constructive given the potential injury that early withdrawals can do to long-term retirement financial savings.

“The findings counsel that many South Africans are demonstrating restraint, which is essential to guard long-term retirement outcomes. Continued monetary training will probably be important to strengthen the worth of preservation.”

Besides protecting each day bills and debt, individuals are additionally withdrawing funds to pay for training, sudden bills, holidays and even to reinvest. These had been the highest causes for two-pot retirement system withdrawals:

• Cover day-to-day bills: 48%
• Pay off debt: 46%
• Education charges: 30%
• Unforeseen bills: 26%
• New home equipment: 25%
• Holidays: 23%
• Reinvested: 20%

ALSO READ: Two-pot retirement system: 75% of second yr withdrawals are repeats

Withdrawals amongst folks youthful and older than 60

In the group of respondents who’re youthful than 60, 43% of the 74% who already withdrew funds, stated they might not withdraw from their financial savings pots sooner or later, whereas 31% stated they might. People from the Affluent (65%) and Wealth (51%) teams really feel most strongly about not withdrawing (65% and 51%). People from the Entry Wallet and Entry Banking teams (38%) famous the best propensity to withdraw beneath the two-pot retirement system

The withdrawal charges of the group of respondents older than 60 remained constant at about 30%, with debt reimbursement the first purpose for withdrawing.

Zwane says from a behavioural perspective, FNB knowledge reveals that withdrawal selections weren’t solely a consequence of fast wants however had been additionally formed by life stage and revenue ranges.

“The withdrawal statistics align with exterior findings that the majority of withdrawals got here from people with fund credit under R250 000, which usually interprets to folks and households which can be most certainly going through fast monetary pressures.”

ALSO READ: Misconceptions in regards to the two-pot retirement system: What it’s worthwhile to know

He factors out that the two-pot retirement system already triggered shifts in client behaviour in terms of retirement financial savings.

“Introduced to steadiness long-term preservation with restricted pre-retirement entry to funds, the two-pot retirement system divides new contributions into the 2 distinct elements of a ‘retirement pot’ that is still locked till retirement and a ‘financial savings pot’ that individuals can withdraw cash from beneath particular situations.”

Understanding of two-pot retirement system

He notes that the depth of understanding varies throughout revenue teams, with folks within the prosperous group having higher consciousness than Entry Wallet clients.

“What shoppers are doing with these withdrawals reveals lots in regards to the present financial realities and the monetary pressures many South Africans face.”

ALSO READ: Two-pot retirement system: Do sufficient?

He believes that the small but in addition significant group reinvesting their withdrawn funds elsewhere means that they’re sad with the efficiency of their retirement investments, or that they’re merely making an attempt to leverage the system as a liquidity software.

“These FNB findings are echoed in nationwide traits. Within six weeks of implementation, the South African Revenue Service (Sars) reported greater than 1.1 million accepted withdrawal functions, with R22 billion paid out.

“By January 2025, over 2.6 million withdrawals had been processed, pushing whole disbursements previous R43 billion. The South African Reserve Bank has projected that whole withdrawals within the preliminary months might vary from R40 billion to R100 billion, suggesting a short-term monetary enhance for an awesome many households, however it additionally raises the potential for detrimental long-term penalties, particularly in terms of retirement financial savings adequacy.”

What determines success of two-pot retirement system

Zwane says what is obvious is that the success of the two-pot retirement system over time will rely massively on training and behavioural steering. “It is regarding that FNB’s analysis factors to a ignorance in lower-income teams and confusion about long-term impacts amongst lots of those that are conscious.

“This highlights the truth that monetary establishments, retirement fund directors and monetary advisors have a key function to play in serving to shoppers perceive not simply easy methods to entry their cash, however whether or not they need to.

“Consumers are usually conscious of the two-pot retirement system rule utilized to retirement funds. However, our findings point out that lower than one-third of shoppers made a withdrawal, with the first motivations being to cowl each day bills and handle debt.”