SPENDING AND SAVING: Two-pot, two years later: savings are used to put food on the table

Two years after the introduction of South Africa's two-pot retirement system, the initial concerns about individuals using their retirement savings for non-essential expenses appear to have been partially realized. Instead of being spent on vacations or luxury items, many retirees are drawing from their second savings pot to meet immediate financial needs. According to Michelle Acton, chief customer officer at Old Mutual Corporate, data collected from approximately 35,000 survey respondents indicates that the primary use of these withdrawals is for basic living expenses rather than debt repayment. Acton noted that prior to the implementation of the two-pot system, participants had indicated that they would use the funds primarily for emergencies and debt management. However, recent surveys show a shift in priorities. The main reason cited for accessing the savings pot is now related to essential living costs, including purchasing food, supporting family members, and covering school fees, rent, and utility bills. Unsecured debts, such as personal or family loans, remain a secondary concern, highlighting how these withdrawals are often filling the gap between income and survival. The evolution of the two-pot debate reflects this change. Initially focused on whether individuals should be permitted to access their savings, the conversation has shifted toward understanding the implications of these withdrawals on long-term financial stability. With the legal framework allowing access and many households relying on it, the greater challenge lies in ensuring that the remaining funds continue to grow and contribute to future security. Old Mutual reports a positive trend in preservation rates, which have increased by 33%. Cash withdrawals upon leaving employment have decreased from 61% to under 50%, indicating a growing awareness among savers about the importance of maintaining their retirement savings. Additionally, the number of individuals planning to make further withdrawals has nearly halved, suggesting a more cautious approach towards managing their financial resources. Sanlam's Benchmark Survey 2026 corroborates these findings, revealing that 84% of stand-alone funds and 80% of umbrella funds observed heightened member engagement following the introduction of the two-pot system. This renewed interest in retirement savings suggests that individuals are beginning to take a more active role in managing their financial futures. Despite these positive developments, there remains a critical distinction between engagement and financial sufficiency. Kanyisa Mkhize, chief executive of Sanlam Corporate, emphasizes that building retirement confidence requires sustained efforts over time, including preserving savings, increasing contributions where feasible, and effectively managing debt. The two-pot system has thus far served as a temporary solution for those struggling with immediate financial pressures, while the broader goal of securing long-term retirement remains a work in progress. Looking ahead, the focus is shifting from critiquing individuals for making necessary withdrawals to providing support that enables them to preserve their remaining savings, understand tax implications, avoid costly debt, and establish emergency reserves outside the retirement fund. If the savings pot continues to serve as the primary means for meeting daily expenses, the system risks perpetuating cycles of short-term survival rather than fostering long-term financial resilience.