JOHANNESBURG, Gauteng — Two years after the introduction of South Africa’s two-pot retirement system, the policy remains a crucial buffer for households navigating a severe cost of living crisis. By allowing workers to access a portion of their savings while keeping the remainder invested, the framework was designed to alleviate immediate financial distress. Yet, as early withdrawals become widespread, industry analysts caution that the long-term retirement security of the nation’s workforce is at risk.
For many citizens, the system offers a rare opportunity to access hard-earned money before traditional retirement age. Roland Ry, who manages a trailer dealership in Johannesburg, represents the growing demographic of workers utilizing the policy. Facing climbing household costs, Ry recently accessed his funds through the system’s digital portal.
“I downloaded the app and I saw that there was like 5,000 rand actually available there, and then I decided to take it because I was in need of some extra money,” Ry explained. He expressed relief at the policy, noting the importance of accessing funds earned through years of labor without having to wait until age 60 or 65 to enjoy the fruits of his work.
The national uptake of the system has been massive. In 2024, nearly 2.5 million South Africans withdrew a portion of their savings, followed by an additional 1.6 million withdrawals in 2025. Beyond providing relief to citizens, the system has also yielded significant benefits for the state. With every transaction subject to taxation, the South African Revenue Service (SARS) has collected close to 940 billion rand in tax revenue.
Government statistics reveal that the majority of these withdrawals were made by middle-aged men between the ages of 35 and 49. These funds were primarily used to keep families afloat, pay off short-term debt, and settle informal loans, including those from loan sharks. However, financial experts warn that this relief is often temporary. Analysts note that once individuals pay off these short-term or informal debts, many simply access more credit, trapping themselves in a continuous cycle of debt.
This behavior is heavily driven by macroeconomic pressures. The impact of global conflicts has materially affected the local economy, leading to escalating fuel and food prices. Coupled with higher interest rates and sticky inflation, household budgets remain severely constrained, prompting cash-strapped citizens to continue dipping into their retirement reserves.
Despite the risks of early withdrawal, the two-pot system has fundamentally shifted local savings behavior. Historically, South Africans were not inherent savers, and the common practice when changing jobs was to withdraw all retirement savings as cash. Under the new framework, the bulk of retirement savings remains locked until the official retirement age, which is expected to improve overall retirement values over time. Furthermore, retirement coverage has improved: 73% of South Africans now have a retirement or pension plan in place, a significant increase from the 60% recorded prior to the two-pot implementation.
Nevertheless, a massive gap remains in overall retirement readiness. Currently, only 6% of the working population can afford a comfortable retirement. This leaves a staggering 94% of the populace unable to cover even 75% of their monthly earnings during their later years, highlighting the delicate balance the system must strike between immediate survival and future financial stability.