When South Africa’s two-pot retirement system was introduced, the big question was whether people would treat their retirement savings as easy money to dip into or leave it alone for retirement. Two years later, the data tells a more complicated story – one driven primarily by real financial pressure.
Many assumed withdrawals would happen evenly across all income groups. However, a survey by Momentum Corporate on the two-pot system and who is making the most withdrawals shows that it is not the poorest South Africans, but rather established, middle-income households who are making repeat withdrawals most often. The reason for this boils down to both money and rules. Many lower-income and emerging middle-class members can’t withdraw at all because their savings fall below the R2,000 minimum required by law. Middle-class members, on the other hand, usually have enough saved to draw on, which turns their retirement savings into a backup emergency fund when the cost of living keeps rising.
Why people are withdrawing
Momentum’s data shows that among members who qualify to withdraw – which accounts for 87% of surveyed respondents – 52% have done so. But the reasons are not what you might expect. People aren’t withdrawing to pay for holidays or investments but to survive: 44% of withdrawals go toward paying off debt, 23% to cover everyday living expenses, and 20% toward education.
Before the system launched, many expected an evener split between paying off debt and building savings. Instead, rising interest rates, inflation, and existing debt repayments have pushed people toward using their two-pot savings simply to stay afloat. For the established middle class in particular, salary increases are not keeping up with debt and rising costs. Once other options such as credit cards, loans, and family support runs out, retirement savings become the last resort.
What people say versus what they do
The data shows a gap between what people intend to do and what actually happens. In 2025, 74% of members said they would only access their savings component in a real emergency. By 2026, however, only 48% of eligible members had not made a withdrawal. That’s a 26% gap between good intentions and financial reality.
Age and life stage also matter. Mid-career millennials, for example, are most likely to make repeat withdrawals as they juggle home loans, debt, the raising children. Gen X members tend to withdraw once and stop. Baby Boomers are the most likely to leave their savings alone, helped by greater financial stability and being closer to retirement. Encouragingly, of those who withdrew, 45% only did so once and 10% say they won’t withdraw again. Many members have learned – after seeing tax deducted and their long-term growth shrink – that repeat withdrawals come at a real cost.
What this means going forward
The key message for financial advisers, fund trustees, and employers is that members are not ignoring their future on purpose but are doing what they need to do get through today. With 41% of members admitting that withdrawals will hurt their retirement savings, the problem isn’t that people don’t understand the risks, they just don’t have a better option.
Going forward, the industry needs three things. First, simple and plain language education that shows people exactly what repeat withdrawals cost them in tax and lost growth – not just the basic rules of how the system works. Second, personal guidance at the moments people are actually deciding whether to withdraw, especially for members in their thirties and forties who are carrying the most debt. And third, real alternatives – accessible, short-term emergency savings options outside of retirement funds, so people have somewhere else to turn when times are tough.
This will allow retirement savings to do what they’re meant to do.
Written by Nashalin Portrag Head: FundsAtWork & Distribution Momentum Corporate