South Africa’s two-pot retirement system is starting to show that limited short-term access to savings does not have to come at the cost of long-term retirement security.
Old Mutual Corporate says preservation has improved by a significant 33% since the inception of the Two-Pot system in September 2024.
In practical terms, that means more members are leaving their retirement money invested when they change jobs instead of cashing it out, which has historically been one of the biggest reasons South Africans arrive at retirement with too little saved.
“The early evidence suggests the two-pot system is delivering on its design and that responsible flexibility can still improve retirement outcomes over time,” says Michelle Acton, Chief Customer Officer at Old Mutual Corporate. “It means members can access savings in moments of pressure, while ensuring that the majority of their retirement savings remains protected and invested. The next step is to apply that same design thinking to participation and contribution levels, so that more savings remain in the system over time.”
The number of Old Mutual SuperFund members preserving their retirement savings has doubled since the reform’s implementation. This improvement has come even as withdrawal activity has returned to inception-level volumes, with around 80% of eligible members having accessed their savings pot at least once and a significant proportion making repeat withdrawals.
“This improvement does not mean the underlying financial pressure has eased. If anything, the withdrawal data shows why structured access remains necessary,” says Acton.
Withdrawals still reflect financial strain
Old Mutual Corporate’s survey makes clear that withdrawals are being driven by financial necessity rather than discretionary spending. Claims are primarily used for basic living expenses (34%), debt repayment (26%) and emergencies (26%), with spending concentrated on essentials such as food, rent, electricity and transport.
“Liquidity pressure is real, and for many South Africans, access to savings is not optional,” says Acton. “What matters is that this access is now structured. Members are no longer required to resign or withdraw everything to meet short-term needs on exit from employment, and that is where the reform is starting to make a measurable difference.”
Preservation is not the same as adequacy
Historically, most members withdrew most, if not all, of their retirement savings when leaving employment. Old Mutual Corporate research suggests that improved preservation under the reform could increase retirement savings by two to three times over a working lifetime, potentially shifting the proportion of South Africans on track for retirement from around 6% to closer to 20%.
Still, better preservation alone will not solve the country’s retirement adequacy problem. Preserving savings means keeping existing money invested for longer. Adequacy, by contrast, is about whether people are saving enough in the first place to retire with sufficient income. “Preserving what you have keeps more money invested,” says Acton. “But adequacy depends on how much is contributed and whether people remain in the system over time.”
“If participation remains quasi voluntary and default contribution rates stay low, under-saving becomes embedded,” she says. “We know which levers move outcomes. The question is whether we are prepared to use them.”
The case for the next phase of reform
Acton argues that the experience of Two-Pot reform strengthens the case for further structural reform. “If system design can influence behaviour at exit, it can influence behaviour at entry,” she says. “Automatic enrolment and calibrated contribution defaults are the next logical step.”
“Two-Pot has started to demonstrated that responsible flexibility can improve outcomes over time,” Acton concludes. “The opportunity now is to strengthen the system so that more savings remain invested for longer.”