Two years after South Africa’s two-pot retirement system was introduced, the headlines have largely centred on one question: how much are members taking out? But behind the withdrawal figures lies another, potentially more significant story.
Source: Supplied. Nic Whittles, senior employee benefits consultant at BDO Wealth.
For the first time, a substantial portion of workers’ retirement contributions is being protected from the temptation to cash out when changing jobs or facing financial pressure.
With two-thirds of new contributions locked into retirement until later life, could the system ultimately leave South Africans better prepared for retirement — even as the savings pot offers much-needed relief today?
"The previous system placed the responsibility for preservation almost entirely on the individual," says Nic Whittles, senior employee benefits consultant at BDO Wealth. "Every time someone changed jobs, they had to decide whether to preserve their retirement savings or take the money. Many people cashed in and effectively started their retirement savings journey again."
According to Whittles, this behaviour has been one of the biggest contributors to poor retirement outcomes. The two-pot system seeks to address this by preserving a substantial portion of retirement savings while still providing access to funds when genuine financial needs arise.
The change comes at a time when many South Africans remain under financial pressure. The 2025 Sanlam Benchmark Survey found that 44% of retirement-fund members had dipped into emergency savings to make ends meet, while 43% do not have an emergency fund. At the same time, 68% said they would contribute more towards retirement savings if they could afford to do so.
"The savings pot provides an important safety net, but members need to understand the long-term cost of withdrawing whenever they can," says Whittles.
He believes one of the greatest benefits of the two-pot system is that it encourages members to stay invested and benefit from compound growth over time.
"When money remains invested over 20, 30 or 40 years, compound growth can have a dramatic impact on retirement outcomes. Every withdrawal reduces not only the amount invested, but also the future growth that money could have generated."
The cost of withdrawing along the way
Based on a member earning R35,000 a month and contributing 10% of their salary to a retirement fund, the long-term cost of withdrawals can be significant. If the savings remain invested, the member could accumulate approximately R717,000 after 10 years and R2.58m after 20 years.
Withdrawing R21,000 from the savings pot every two years could reduce these amounts to approximately R585,000 and R2.1m respectively — a difference of R132,000 after 10 years and R481,000 after two decades.
While the savings pot provides an important safety net during times of genuine need, each withdrawal comes at the cost of future growth. Actual outcomes will vary depending on investment returns, salary increases, fees, taxes and withdrawal behaviour.
Encouragingly, awareness of the two-pot system has increased from 59% in 2024 to 92% in 2025, according to the Sanlam Benchmark Survey. More than 90% of members also indicated that retirement-benefit education and communication are important.
"Members need support when they are making these decisions," says Whittles. "That conversation should consider their immediate needs, the tax implications and the long-term impact on retirement savings. That's where employers, benefit consultants, and financial planners can make a meaningful difference."
As the two-pot system enters its third year, he believes the focus should shift beyond withdrawal statistics.
"Two years in, we shouldn't look only at what has been withdrawn," he says. "We should also look at what is now being preserved. That is where the long-term success of the two-pot system will ultimately be measured."
