1 September 2024 marked a turning point in South Africa’s retirement landscape: the official launch of the two-tot retirement system. For those involved in the months of intense preparation leading up to this deadline, the efforts may now seem like a distant memory. More than a year on, we find ourselves reflecting on the early outcomes, lessons learnt and the early impact it’s had for the future of retirement savings in our country.
A system designed for balance
By design, the two-pot retirement system aims to strike a delicate balance of providing access to a portion of retirement savings without needing to resign to do so, while enforcing preservation of a portion of savings for long term retirement needs. It is a solution to a critical issue in South Africa: poor preservation behaviour, where individuals often cash out their retirement savings when changing jobs, jeopardising long term retirement security.
However, members must not lose sight of the bigger picture: withdrawing from savings, even partially, still reduces the potential retirement outcome. The system ultimately relies on one crucial factor: member behaviour – that is, using accessible funds only in genuine emergencies.
What defines an emergency?
Theory and practice rarely align perfectly. Analysis from SARS indicates that the majority of savings withdrawals have gone toward short term debt, vehicle payments or home-related expenses. Moreover, a significant number of withdrawals in the 2025 tax year came from individuals making their second claim since September 2024.
In today’s economic climate, marked by high inflation and mounting living costs, it’s understandable that individuals seek financial relief. But it does raise a critical question: how do we define an “emergency”? What feels urgent to one person might seem avoidable to another. And while the system wasn’t designed to be prescriptive, it was designed with the hope that early access would be the exception, not the norm.
Awareness and engagement: A double-edged sword
What the two-pot retirement system has certainly achieved is a surge in engagement. Members are now more aware of their retirement savings, asking deeper questions about whether they’re on track for a secure retirement. For many, this is the first time they’ve meaningfully engaged with their retirement fund provider.
This shift has led to the development of new educational content and additional digital tools to support both employers and members. Liberty Corporate Benefits, for example, saw 75% of its savings withdrawal claims processed via digital channels, demonstrating an appetite for modern, accessible solutions.
Yet, even with these tools, some members remain dissatisfied with their net claim values, often unaware of the tax implications and costs involved in accessing savings – and that’s despite the availability of online calculators, benefit counselling and other support tools. This highlights a challenge: information is available, but understanding of some elements may still be limited.
The rise of preservation: A win for retirement security
Encouragingly, data shows that 59% of active members in Liberty Corporate Benefits’ umbrella funds have not touched their savings pot. This could be seen as a sign of success, that is members preserving their funds for retirement or keeping it available only for genuine emergencies.
But the other side of the story remains a reality. A significant proportion of members have already accessed their savings, potentially compromising their long term financial security, as this money could have otherwise contributed towards a greater accumulation of savings at retirement. While access provides relief today, it may leave members vulnerable tomorrow.
One encouraging outcome is the marked increase in the preservation of retirement fund benefits. Our statistics show that the number of members preserving their savings has grown tenfold under the new system. This shift means more individuals are now retaining some retirement savings instead of cashing out the full amount upon resignation – an important step toward greater long term financial security.
Looking ahead: Impact, education and evolution
We are still in the early stages of this journey. While initial withdrawal activity spiked after 1 September 2024, claims have declined in the 2025/2026 tax year. Whether this trend stabilises or resurges remains to be seen.
As we look forward, one thing is clear: the two-pot retirement system demands ongoing review, real time data analysis and continuous education. The system has made people think more critically about their retirement savings, and that in itself is a step forward. But we also know that early access, while helpful in the short term, could compromise long term outcomes.
