A new survey shows that the people who are most likely to withdraw funds under the two-pot retirement system also know the least about it.
Although government implemented the two-pot retirement system in September last year to help South Africans get access to their retirement savings in emergencies, it seems that not everyone who withdrew money used it for a real emergency.
According to the 2025 FNB Retirement Insights Survey, conducted among a sample base of 1 041, awareness of the two-pot retirement system is now widespread, with 69% of respondents indicating they are familiar with it, with 47% feeling fully aware, while 22% said they know a little about it, 15% have heard of it, but do not know what it means and 16% know nothing about it.
Samukelo Zwane, product head at FNB Wealth and Investments, says the good news from the survey is that actual withdrawal rates from savings pots under the two-pot retirement system remain relatively low at just 26% and only 26% of these withdrew R20 000 or more, driven by the emerging affluent market.
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Reasons for two-pot retirement system withdrawals
He says the main reasons that people withdrew funds were to cover daily living expenses and manage debt. “This cautious approach is positive given the potential damage that early withdrawals can do to long-term retirement savings.
“The findings suggest that many South Africans are demonstrating restraint, which is crucial to protect long-term retirement outcomes. Continued financial education will be vital to reinforce the value of preservation.”
Besides covering daily expenses and debt, people are also withdrawing funds to pay for education, unexpected expenses, holidays and even to reinvest. These were the top reasons for two-pot retirement system withdrawals:
- Cover day-to-day expenses: 48%
- Pay off debt: 46%
- Education fees: 30%
- Unforeseen expenses: 26%
- New appliances: 25%
- Holidays: 23%
- Reinvested: 20%
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Withdrawals among people younger and older than 60
In the group of respondents who are younger than 60, 43% of the 74% who already withdrew funds, said they would not withdraw from their savings pots in the future, while 31% said they would. People from the Affluent (65%) and Wealth (51%) groups feel most strongly about not withdrawing (65% and 51%). People from the Entry Wallet and Entry Banking groups (38%) noted the highest propensity to withdraw under the two-pot retirement system
The withdrawal rates of the group of respondents older than 60 remained consistent at about 30%, with debt repayment the primary reason for withdrawing.
Zwane says from a behavioural perspective, FNB data shows that withdrawal decisions were not only a consequence of immediate needs but were also shaped by life stage and income levels.
“The withdrawal statistics align with external findings that the bulk of withdrawals came from individuals with fund credits below R250 000, which typically translates to people and families that are most likely facing immediate financial pressures.”
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He points out that the two-pot retirement system already triggered shifts in consumer behaviour when it comes to retirement savings.
“Introduced to balance long-term preservation with limited pre-retirement access to funds, the two-pot retirement system divides new contributions into the two distinct components of a ‘retirement pot’ that remains locked until retirement and a ‘savings pot’ that people can withdraw money from under specific conditions.”
Understanding of two-pot retirement system
He notes that the depth of understanding varies across income groups, with people in the affluent group having greater awareness than Entry Wallet customers.
“What consumers are doing with these withdrawals reveals a lot about the current economic realities and the financial pressures many South Africans face.”
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He believes that the small but also meaningful group reinvesting their withdrawn funds elsewhere suggests that they are unhappy with the performance of their retirement investments, or that they are simply trying to leverage the system as a liquidity tool.
“These FNB findings are echoed in national trends. Within six weeks of implementation, the South African Revenue Service (Sars) reported more than 1.1 million approved withdrawal applications, with R22 billion paid out.
“By January 2025, over 2.6 million withdrawals had been processed, pushing total disbursements past R43 billion. The South African Reserve Bank has projected that total withdrawals in the initial months could range from R40 billion to R100 billion, suggesting a short-term financial boost for a great many households, but it also raises the potential for negative long-term consequences, especially when it comes to retirement savings adequacy.”
What determines success of two-pot retirement system
Zwane says what is clear is that the success of the two-pot retirement system over time will depend massively on education and behavioural guidance. “It is concerning that FNB’s research points to a lack of awareness in lower-income groups and confusion about long-term impacts among many of those who are aware.
“This highlights the fact that financial institutions, retirement fund administrators and financial advisors have a key role to play in helping consumers understand not just how to access their money, but whether they should.
“Consumers are generally aware of the two-pot retirement system rule applied to retirement funds. However, our findings indicate that less than one-third of consumers made a withdrawal, with the primary motivations being to cover daily expenses and manage debt.”
