Two-Pot Retirement System Sparks Surge In Withdrawal Requests

Holifil

04 Apr, 2025

Since early September 2024, Alexander Forbes has processed a staggering 78,000 withdrawal requests.
The Two-Pot Retirement System went live on September 1, allowing citizens to tap into their retirement funds.
An Alexander Forbes executive advises caution, urging people to consider long-term benefits before withdrawing early.

Briefly News journalist Byron Pillay has spent over a decade covering South Africa's political landscape, crime, and social issues with a sharp eye for detail.

JOHANNESBURG – The financial world is buzzing as the Two-Pot Retirement System officially kicked off in early September. Financial services giant Alexander Forbes has been overwhelmed with withdrawal requests since the system launched, showcasing just how eager South Africans are to access their hard-earned savings.

This new system, which became effective on September 1, 2024, gives citizens the flexibility to withdraw a portion of their retirement savings early. But here's the catch—while one-third of the savings can be withdrawn anytime, the remaining two-thirds are locked away for retirement. It's like having two separate pots of money, each serving a different purpose.

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Alexander Forbes has processed 78,000 withdrawal requests since the Two-Pot Retirement System came into effect. Image: RapidEye. Source: Getty Images

Why Alexander Forbes is Seeing Record Withdrawal Requests

Since the Two-Pot Retirement System went live, Alexander Forbes has seen a flood of activity. The company revealed that they’ve processed more than R1 billion in withdrawals so far. That’s right—over a billion rand has already moved out of retirement accounts in just a few weeks. And if you think that’s impressive, consider this: they’ve handled a whopping 78,000 withdrawal requests since the beginning of September.

But let’s not forget about the taxman. The South African Revenue Service (SARS) will take its share from every withdrawal. So, while it might feel great to have that cash in hand, it’s important to remember that not all of it will stay in your pocket.

Financial Expert Weighs In: When Should You Withdraw?

With SARS taking its cut, many people are wondering when the best time is to withdraw their money. John Anderson, Executive for Solutions and Enablement at Alexander Forbes, has some sage advice for consumers. He emphasizes the importance of patience, encouraging people to think long-term rather than short-term gains.

Anderson explained, “If you leave your money untouched until retirement, the tax treatment will be far more favorable. In fact, when you reach retirement age, you could qualify for up to R550,000 tax-free on your retirement funds. That’s a significant chunk of change you’d be missing out on if you withdraw early.”

“So, it’s actually better to keep your money where it is for as long as possible from a tax perspective,” Anderson added. “Think about it this way: the longer your money stays invested, the more it grows. And when you finally do withdraw it at retirement, you’ll get to keep more of it.”

Finance Minister Sounds the Alarm

Finance Minister Enoch Godongwana isn’t mincing words. He recently issued a stern warning to South Africans, urging them to use their retirement savings wisely. Godongwana cautioned citizens not to squander their hard-earned money now that the Two-Pot Retirement System is in place.

Despite his warnings, many people have chosen to ignore the advice. Some have openly stated that they plan to spend their withdrawals however they see fit. While it’s their money, and they’re entitled to do what they want with it, the long-term consequences of such decisions could be severe. As Briefly News previously reported, the temptation to spend now rather than save for later is proving too strong for some.