The two-pot retirement system changed pension and retirement funds in South Africa significantly. What did we learn from it?

It is now a year after the implementation of the two-pot retirement system that gave pension fund members the opportunity to withdraw some funds from a third of their retirement savings. While it seems that the one thing consumers learnt is how the process works, fund managers also leaned a thing or two.
Stanley Gabriel, executive head of Momentum Savings, says financial services companies braced for a surge in withdrawals from individuals seeking financial relief when the two-pot retirement system was implemented.
“As expected, the numbers were substantial. The Momentum Group alone received 344 898 valid claims with R5.4 billion withdrawn between September 2024 and June 2025. Interestingly, 8% of claimants cancelled their withdrawals after speaking to their financial advisers, highlighting the critical role of professional guidance.”
Gabriel says the withdrawal data provides a clear picture of who accessed their retirement savings and why. Sars’ analysis reveals that many claimants were from lower-to-middle-income brackets, with 50% of claimants earning less than R31 000 per month.
“This suggests a genuine need for financial relief among a significant portion of the population.”
ALSO READ: Two-pot retirement system: the trends one year on
Concern about people withdrawing in their later years
Three-quarters of claimants were between the ages of 30 and 49, a demographic group often juggling family responsibilities and debt. Gabirel says it is even more concerning that nearly 20% of claimants were over 50, nearing retirement.
“For this group, a withdrawal could have a significantly negative impact on their future pension income, making their financial vulnerability particularly alarming.”
Gabirel points out that the most striking trend is the growing number of first-time claimants in the second withdrawal cycle that started on 1 March, with 37% of claims coming from individuals who had not withdrawn before.
“This indicates that the need for access to funds is not a one-off event for many.
“These figures reveal a story that goes beyond simple economics. It speaks to the daily struggles of people who are even actively saving for retirement. The two-pot retirement system, while among others designed to prevent resignations for financial access, has become a lifeline. People used this money to pay down education and cell phone debt and even buy food.”
While many withdrawals were for genuine needs, he says some were used for what could be considered “small luxuries” rather than essential expenses. “This highlights a critical challenge for the financial services industry: how to support clients in making the best long-term decisions without being paternalistic.”
ALSO READ: Two-pot retirement system: financial lifeline or long-term liability?
Two-pot retirement system and financial advice
According to Gabriel, the data highlights the power of financial advice.
“The fact that many clients chose to cancel their withdrawals after consultation with a financial adviser proves that people are open to guidance, reinforcing the industry’s responsibility to educate and remind clients of the long-term consequences of withdrawals, including the impact of lost compound growth, taxes and fees.”
The two-pot system offers a valuable lesson: access to savings is a reality, not a hypothetical scenario, Gabirel warns. “As an industry, we must continue to emphasise the importance of making informed decisions.
“This means not just advising people not to withdraw but helping them understand the true cost of a withdrawal and providing clear calculations on what they would need to reinvest to get back on track.”
The ultimate goal remains the same: to encourage people to stay invested for the long term, he says. “The power of compound growth is the most effective tool for building a secure retirement. The two-pot system should be seen as an emergency relief valve, not a go-to solution for every financial want.”