Alexforbes two-pot retirement savings outflow tops R1.5 billion (of which R270m goes to SARS)

Clement Manyathela speaks to John Anderson from Alexforbes and Muvhango Lukhaime from the Pension Fund Adjudicator.

Listen below.

Fund managers are inundated with requests following the implementation of the two-pot system on 1 September.

Alexforbes says it has seen an outflow of over R1.5 billion since the system kicked 9off.

It has processed over 78 000 withdrawal requests from its members (as of 9 September).

“In a 10-hour work day, we are getting a claim every two seconds… The engagement levels are extremely high, but also the number of claims are a lot higher than we anticipated.”

- John Anderson, Alexforbes

While people are understandably looking for additional income with the current cost of living, there is evidence that many misunderstand the system.

Anderson says several people rush to get the money now, thinking it's a once-off opportunity.  

“From 1 September you can access your savings pot [and] every month a portion of your contributions goes into the savings pot. You can withdraw it at any time, subject to once per annum.”

- John Anderson, Alexforbes

Several people also misunderstand the impact of withdrawals on their tax liability.

At least R270 million of the R1.5 billion that is being processed will go to SARS, says Anderson. 

“We also had a lot of people that owed SARS additional amounts that will be deducted. We had one case where almost the entire savings claim was taken as tax.”

- John Anderson, Alexforbes

“It is actually meant as an emergency backup fund if things go wrong. [This idea] actually came from Covid-19 when people needed financial relief. It’s meant for that type of emergency, not an ongoing savings account.”

- John Anderson, Alexforbes

The two-pot retirement system has also exposed several companies for not contributing to employee pension funds. Over the last six years, they constituted 80% to 82% of complaints received by the Pension Fund Adjudicator. 

RELATED: Companies EXPOSED by two-pot retirement system for not paying employee pensions

“Unfortunately, the funds don’t do what they are supposed to… go after the employers when they fail to pay the contributions.”

- Muvhango Lukhaime, Pension Fund Adjudicator

Members are encouraged to look at their annual benefit statements.

If you are not receiving these statements, please consult your fund administrator.

“If you are not receiving them you’ve got to know that there is something wrong with the way your funds are being administered.”

- Muvhango Lukhaime, Pension Fund Adjudicator

Scroll up to the audio player to listen to the discussion.