By John Anderson

SINCE the implementation of the new two-pot retirement system on September 1, 2024, South Africans have shown significant interest in accessing their retirement savings through the newly introduced savings pot.

Now that we are in the new tax year and members may withdraw from this savings pot again, Alexforbes has already received over 33,000 savings pot withdrawal claims from members, following 260,000 logins to AF Connect (the company’s digital platform) since March 1, 2025.

Our research shows that individuals who claimed in the previous tax year had a high likelihood of claiming again in the new tax year, which began on Saturday. This already appears to be the case, given the significant numbers of claims in just four days.

This high level of claims so early in the tax year once again highlights that many South Africans are financially stretched. A previous survey done by Alexforbes showed that 80% of claimants used their withdrawals for debt repayment and essential living expenses.

However, indications from banks suggest that some individuals are using the withdrawals for consumption. Either way, this trend highlights the difficult financial conditions many individuals are facing.

While this new system provides much-needed financial relief for members facing short-term financial constraints, Alexforbes urges members to consider the long-term impact of withdrawing from their retirement savings and to remain vigilant against cybercrime threats.

Key considerations before withdrawing:

Impact on long-term retirement planning

Withdrawing funds from the savings pot means reducing the capital that will compound over time to provide financial security in retirement. Members should carefully assess whether they genuinely need the funds or if alternative financial solutions are available.

Tax consequences

Withdrawals from the savings pot are subject to taxation as part of a member’s annual income. This could result in a higher tax bracket and an increased tax liability. Members are encouraged to seek financial advice to fully understand the implications.

Beware of cybercrime and fraud

With heightened activity around withdrawals, scammers and fraudsters may increasingly target retirement fund members. Alexforbes strongly advises members to:

Only use official platforms like AF Connect to process their claims.
Never share their personal information, including banking passwords or OTPs, with anyone claiming to assist with withdrawals.
Be cautious of unsolicited and unexpected messages or emails that appear to come from financial institutions.

A call for responsible financial management

The introduction of the savings pot is a positive step toward financial flexibility for South Africans. However, its success depends on responsible use. Alexforbes urges all retirement fund members to consider their long-term financial well-being, carefully evaluate their need for immediate withdrawals, and take the necessary precautions to protect themselves from cyber threats.

* John Anderson is an executive in solutions and enablement at Alexforbes.

- PERSONAL FINANCE

#two-pot-system

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