South Africa’s two-pot retirement system is starting to show that limited short-term access to savings need not undermine long-term retirement security. For retirement fund trustees, this is an important early signal that better system design can support improved member outcomes.
Old Mutual Corporate says preservation has improved by a significant 33% since the inception of the two-pot system in September 2024, addressing one of the most persistent causes of poor retirement outcomes in South Africa.
“The early evidence suggests the two-pot system is delivering on its design and that responsible flexibility can still improve retirement outcomes over time,” says Michelle Acton, Chief Customer Officer at Old Mutual Corporate.
“It means members can access savings in moments of pressure, while ensuring that the majority of their retirement savings remains protected and invested.
“The next step is to apply that same design thinking to participation and contribution levels, so that more savings remain in the system over time.”
The number of members preserving their retirement savings has increased significantly since the reform’s implementation. This improvement has come even as withdrawal activity has returned to inception-level volumes, with around 80% of eligible members having accessed their savings pot at least once and a significant proportion making repeat withdrawals.
Withdrawals still reflect financial strain
For trustee boards, the message is twofold: improved preservation is encouraging, but sustained withdrawal activity shows that many members remain under material financial pressure. Old Mutual Corporate’s 2026 survey shows that withdrawals are being driven largely by necessity rather than discretionary spending.
Claims are primarily used for basic living expenses (34%), debt repayment (26%) and emergencies (26%), with spending concentrated on essentials such as food, rent, electricity and transport.
“This improvement does not mean the underlying financial pressure has eased. If anything, the withdrawal data shows why structured access remains necessary,” says Acton.
For trustees, this makes withdrawal behaviour a financial wellness issue as much as a retirement savings issue. It also reinforces the need for clear member communication, practical education and ongoing monitoring of how repeated withdrawals may affect long-term outcomes.
“Liquidity pressure is real, and for many South Africans, access to savings is not optional,” says Acton. “What matters is that this access is now structured. Members are no longer required to resign or withdraw everything to meet short-term needs on exit from employment, and that is where the reform is starting to make a measurable difference.”
Old Mutual Corporate research suggests that improved preservation under the reform could increase retirement savings by two to three times over a working lifetime, potentially shifting the proportion of South Africans on track for retirement from around 6% to closer to 20%.
More preservation doesn’t mean enough for retirement
However, as trustees know, better preservation shouldn’t be confused with retirement adequacy.
“Preserving what you have keeps more money invested,” says Acton. “But adequacy depends on how much is contributed and whether people remain in the system over time.”
“If participation remains quasi voluntary and default contribution rates stay low, under-saving becomes embedded,” she says. “The data shows which levers move retirement outcomes: preservation, higher contribution rates, stronger default fund design, later retirement ages, appropriate investment strategies and better annuity choices at retirement. The question is whether we are prepared to use them.”
Acton argues that the experience of Two-Pot reform strengthens the case for further structural reform.
“If system design can influence behaviour at exit, it can influence behaviour at entry,” she says. “Automatic enrolment and calibrated contribution defaults are the next logical step.”
“Two-Pot has started to demonstrate that responsible flexibility can improve outcomes over time,” Acton concludes. “The opportunity now is to strengthen the system so that more savings remain invested for longer.”
