Is the two-pot system a temporary fix or future trap

It’s no surprise to learn that South Africans are hitting the two-pot pension fund hard, with 75% of the withdrawals in the current tax year being repeat moves to liquidate cash.

These are middle-class people struggling to keep their heads above water financially and they believe the system is a lifeline, however temporary.

The current desperation appears to weigh heavier than the reality that any withdrawals made now mean there will be less in the fund to build a decent retirement nest egg.

It must be said that South Africans are “live for today and to hell with tomorrow” people, which is one of the reasons the two-pot system was set up in the first place… because so many people were using retirement money, instead of investing it.

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Part of that culture includes rash and excessive spending on credit in the effort to “keep up with the Joneses” and acquire fancy, but ultimately hugely depreciating, assets.

Yet, not all people are reckless.

Some are battling to put food on the table, pay for lights and water and food, never mind transport.

We hope this lack of saving doesn’t turn around and bite us as a country in the decades to come.

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